How To Choose Investment Real Estate Property

The decision to invest in real estate is an important one

. When you begin choosing the properties you will purchase, there are several factors you should consider. This article will provide tips for doing so and help you make the right choices.

Consider your goals. If you are planning on purchasing investment property for the purpose of renting it out, think about the market you wish to target. If you don't have a lot of money for getting started, you may need to purchase small homes that will be primarily rented by an individual or couple. These would be more like starter homes and would usually contain two to three bedrooms. The square footage would not be all that much, but they would make great first investments. They would also make wonderful homes to renters looking for a good deal without having to spend a lot of money each month.

Consider the renter's market. If rent is high in your area, you'll need to charge the equivalent in order to provide great value and make the house inviting. If you go too low, potential renters will wonder what is wrong with the property or the area. While the price of real estate will fluctuate, rent often remains relatively the same.

Consider what your house payment will be and compare that to the cost of rent each month. You want to take in more than you are sending out, so make sure the rent you receive will be more than your monthly house payment. Otherwise, you are just renting the house to pay for it and you won't be making any money from the venture.

Make a sizable down payment. This will decrease your house payments and enable you to make more from the rent. The more you are able to put down, the more your monthly payments will decrease.

Consider any repairs that will need to be performed on the investment property before purchasing it. This is important because you must be able to make those repairs. If they aren't necessary you could go ahead and rent the home, but you would be better off to make any improvements first in order to raise the value of the home. This will also help you tremendously when it comes time to sell.

Use the money you make from one home to purchase another. This is how you will grow your investment property business and really begin seeing a profit. The more you make the more you can save. You will need to put some of that money back into homes and other properties for improvements and renovations, but if you choose carefully, you may find homes that don't actually need many repairs or updates. This will allow you to use your money toward down payments and other fees associated with buying and selling property. It will also give you a repair fund you can use when work does need to be completed on investment property you are renting.

Copyright (c) 2010 Jack Bosch

by: Jack Bosch

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