It's about creating a financial situation to buy and continually invest.
Many people are looking at real estate right now for investment purposes - and too often I come across those that think, "I'll just buy a cheap home, rent it and make some money." If this is your goal - you might do OK - but the odds of being successful at investing in real estate will be short lived.
Investing doesn't just begin with buying - it begins with research to buy the right home. Some best tips:
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Buy what you can afford first and foremost. And by this I mean - if the home needs repairs, improvements or might be vacant - how much can you afford and for how long?
· Research neighborhoods in your area and the types of tenants you may get. For instance, if you buy near a military base, odds are - you'll receive interest from applicants who work on base; or if you buy near a university - your tenant base will most likely be students.
· Check the area for amenities: nearby public transportation, schools, parks, malls, grocery stores, etc.
· Research rent rates in several areas as well as vacancy rate.
· Decide on the type of home you want - personally, I think single family homes are the best; however condos and townhomes provide lower maintenance and costs - but they also bring lower rents.
· And the biggest thing to consider - appreciation - short and long term. For example - if you made some improvements to the home - will it yield a higher rent? And long term, if you needed to sell your rental property for an unknown reason, could you without taking a loss?
After you have researched and narrowed down your choice, that's when it's time to factor in cash flow. Be realistic when figuring out this number. Consider vacancies, improvements, repairs, insurance costs, mortgage payment if any, etc. Take that total number, subtract it from potential rent (and figure that rent low not high). If you break even or have any left over - that's when it's time to make an offer on the home you want to invest in!
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