As investors grow tired of the ups and downs of the stock
market, they begin to consider the concept of property
investing as a better alternative. While not all people are
cut out to be landlords, those who do may find that rental
properties are great for building their long term wealth.
But first, you need to know how to find good investment
property.
Making the decision to purchase rental property is easy.
What's going to be a bit complicated is finding a
profitable rental property. This normally takes time,
connections and lots of research.
Here are the things you need to know to get yourself
established:
1. Set up your time horizon.
Before buying a property, you should have a concrete idea
of how long you want to own it. If you're targeting a
longer term investment, you will likely need to invest in
repairs, improvements and maintenance.
However, if you're planning to own a property for a short
time, you'll probably want to skip making key improvements.
That is, if you are sure that you can earn back the costs
you incurred at a higher sale price.
2. Expand your network.
Landlords who have had more experience are knowledgeable
when it comes to finding properties. They usually: check
out repossessions, run ads in newspapers, or work with
estate agents. To gain contacts, many landlords suggest
that investors join a local property owner's organization.
Another way is to get in touch with landlords directly to
see if they are selling their properties. You can also call
the numbers posted on rental ads in the newspapers. If
you're willing, you can also comb neighborhoods with your
eyes on the "for rent" signs.
3. Make sure your finances are robust.
If you have good credit, low credit card and consumer debt,
it is more likely that you can get yourself a loan at a
decent rate. When you buy rental property, a lender will
require that you make bigger down payments and pay higher
interest rates compared to a loan on your own home. This is
because there is a higher percentage of investment property
owners that default compared to homeowners.
A lot of landlords also suggest that there should be a
sufficient amount of cash reserve at hand even after buying
a property. This will be useful in times of vacancy and
whenever there are unexpected repairs to be done. You
should also make sure that you can save enough for your
retirement needs and other life goals before you invest in
rental property.
While not all property markets are the same, the key is to
ensure that the rental income will include expenses, such
as mortgage payments on the property, maintenance and
repairs, vacancy rate, taxes and insurance. If you want to
get a better estimate of your costs you should get a
detailed inspection before you buy any property.
If you want more sources on various real estate issues you
can take a look at real estate forums such as the property
tycoons forum. These resources will offer you valuable
information and insights you need to help you get solidly
ensconced in the rental industry.
----------------------------------------------------
Parmdeep Vadesha is a property investment expert and
founder of the largest community of property entrepreneurs
on the web who buy below market value properties from
distressed homeowners facing repossession, divorce and
bankruptcy. He writes a monthly newsletter for over 70,000
property investors worldwide -
http://www.Property-System.com
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