Quoted in the WSJ ,
MSN.com. and appeared on CNBC
- Best of Diane's Mortgage Tips
-How To Get A Mortgage
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Estate Agents Directory
BUYING AN INVESTMENT PROPERTY
By Diane St James © 2003
Some folks have been asking me lately for some good tips for
buying investment properties. So I thought I would share a few.
1. LOOK FOR THE BARGAINS
First and foremost, if at all possible, seek out a property that
is up for sheriff sale or has been repossessed by HUD. There is a
good possibility that you can get it for a much lower price than fair
market value. Just make sure that you check it out before making an
offer. If it is in total need of renovation, you may not have the
resources or it may not be worth it once you've spent thousands
getting it 'livable'.
You can check the local paper, courthouse and some websites that
list these types of properties and check them out. Look at the
surround areas as well to see if the neighborhood is maintained or
getting run down. If there are houses on the street that are boarded
up, you may want to pass. It may be difficult to get a good paying
tenant in it even if you do get it at a good price.
2. LOCATION, LOCATION, LOCATION
This is a favorite thing that real estate agents like to say, but
it is true! Look for rentals in areas where there will always be a
demand for housing. Choose properties in busy towns or cities versus
out in the country where you may have to worry about vacancy factor
and the amount of rent you will be able to demand.
You can also choose hot vacation spots such as shore rentals. Many
folks pay top dollar to rent a place near the beach, although these
will cost more as well. But if you have enough for the initial
investment, thousands can be earned just during the summertime.
3. THINK IN NUMBERS
When thinking of an investment property, think in terms of
maximizing your rental income. This means look for the 2, 3 and 4
unit properties. The more units a dwelling has, generally the more
rental income to be made. If you purchase a 3-unit property that can
demand rent of $600/month for all three units and it costs you
$1200/month in mortgage payment, you not only have enough rental
income to cover the mortgage payment but also have $600/month net
profit. You will need more money down, the more units you purchase
but it could be worth it if you have the assets.
With these tips in mind, you also have to consider the work that
may be involved with owning investment properties. You could have
problem tenants, maintenance and repair expenses and inconveniences,
and possible times of vacancy. But if you are willing to take the
good with the bad, you are ready to start looking for your first
Purchasing investment properties can be a great way to provide
income and increase your net worth in real estate. Happy hunting!
Diane St. James is a mortgage professional with over 23 years
experience. Her website http://www.abcmortgage.net exists to help
educate people about the mortgage world. She is the author of 2
e-books, and has been quoted in the WALL STREET JOURNAL,
appeared on national cable new television CNBC, and was featured on
a Cover Story for USA
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