How to Choose Rental Property

Money/Finances - Budgeting Money

By: NicholasForge 01-Nov-2010

Introduction:

Do you want to make money, become rich and retire young? Absolutely! Make money with investment property. Real estate is a profitable business that's easy to learn. This article will teach you how to buy investment property and make lots of money. Make sure to click on the links in the supporting links box below. They offer great tips and ways of making money and building wealth.

Look For Property Close to Where You Live

Buying rental property that's close to where you live is a smart way to invest and a sure way to make money.
First of all, you have a better understanding of how the market works where you live. Since you live in there, you know what areas are good and bad. This helps avoid buying bad rental property.
Secondly, you won't have to travel far if something happens at the property. The closer you are the faster it will be to solve problems. Time is money, especially when it comes to investment property.

Buy Multifamily Properties

To make money in real estate you need to invest in property with 2 or more units. The more units on the property, the less risky the investment and the more money you make. Main reason being is that you pay less per unit and have more "inventory" to sell.
Each unit pays you money each month. A house with 2 units makes you more money than single family home. Plus, single unit properties are very risky. If the tenants leave you make no money. If a tenant leaves in a 2 unit building you still have one more unit making you money.
Bottom line, if you buy multifamily investment property, you WILL MAKE MONEY!

Determine the Cash Flow of the Investment Property

Knowing how much money the property cost and how much money it will make is critical. Estimating the cash flow is the most important part of buying investment property.
This is very easy to calculate. Click the link in the Supporting Links below. It will teach you how to calculate cash flow.

Put Money Down

Invest a minimum of 20% for a down payment. If you can, put even more money down. This will ensure a safe investment that makes you money.
This is important in several ways.
First, the smaller your payment the more likely you can afford it when your investment property is vacant.
Secondly, smaller payments mean you pay less interest to the bank and put more money into your pocket.
If you can't afford a large down payment, find investors that can. Go into the deal together and you both can benefit.
Once you get you 20%, get pre-approved for a mortgage. Before looking or visiting investment properties you must be fully prepared to buy. If your financing is not in place, the sellers will reject your offers.
Click on the link in the Resource Box. It will show you how to apply for a mortgage.

Make an Offer and Buy

Make an offer 15-30% lower than the price of the investment property. Don't you dare be shy or hesitant about this! NEVER overpay for a property. Your only goal is to get a great deal and make money. This means you must make very low offers.
You should strive to make 10-30% on you investment. Example, if you put $10,000 down you should make $1,500 a year minimum!
If they accept your offer, buy the house and start making money!
Remember, you make your money when you buy the property and not when you sell it.

Final Thoughts

Do everything in your power to pay of your loans as fast as possible! Use everything you earn from the property to pay down the debt. The faster you pay down the debt, the faster you will become rich. Real estate is an amazing business. Eventually, try buying houses for cash. This is the safest and fastest way to become a millionaire.