What to Look for when Buying a Investment Property?

By
Real Estate Agent with Allison James Estates and Homes BRE#01124792

What should I be looking for in my first investment property?

    I have people always asking me how can I get into the Real Estate Market and make a good investment. Some people listen, others say they don't want to be a property manager, and others are just scared to make the move.

    I have been there and understand these fears and concerns. This is how I did it 20 years ago and its still the same today. I worked a regular full time job so I could qualify for a loan. I focused on Duplexes, or Two Houses on One Lot, that way when there was a vacancy I would still collect rent on one of the units and still pay my payment with the other units income,  which eased the financial burden.  

   *The benefits of buying a 1-4 unit property*

Financing is the key to being profitable. On a 1-4 unit property you can get regular FHA and VA financing, the down payment will vary depending on if its your primary home or not. Best case scenario , rent one side out, and live in the other so you can get in with 3 1/3% down on an FHA loan and 0% down if you are a Veteran, you will get a great owner occupied rate too!  If you can't live on the property you will need 20-30% down and interest rate will be approx 1 percent higher.  Now that's alright if the property cash flows and you can make money on the money you put down. The other thing about 2 - 4 units properties is when rents increase with time, you can give yourself a raise for every unit you own, so if you own 4 units and you raise the rents $50.00 each unit, you get $50.00 x 4 units = $200.00 a month raise and the great thing is if you have a fixed loan, your income goes up $2400.00 a year!!  Can you imagine buying 4 of these? 16 units x $50.00 a unit =$800.00 a month x 12 months = $9,600.00 raise a year!! This is why I love Real Estate!

    The key is in the numbers, what can you get for rent for each unit? Are the rents under market? What is the actual market rent? Do they need repairs? Are the tenants currently there long term and at market rents? If you can break even these days in California you are doing good. I used to say make at least a $300.00 profit per month, but I have far exceeded that.  There are still some great areas in California you can invest and make positive cash flow but its getting harder and harder to find. The other thing to keep in mind , do you want cash flow and income and less depreciation, or do you want less cash flow and more appreciation? The home price and area will help you determine this.

     Can I retire on my Real Estates investments? Absolutely! I never did invest in a 401k I only invested in Real Estate and thank goodness I did. You see, every year rents have continued to rise and rents stay with the cost of living, I give myself a raise every time a tenant moves out, I should raise them yearly but feel, a vacancy will cost me more then the few dollars I would raise the rent, but thats not good business, I should have increased a little per year. 

Have you ever known rents to ever go down? Even when the Real Estate Market Crashed?  Never in my 20 years of investing has rents decreased, they have always increased up!!

If you have been considering investing in Real Estate or want me to give you a free consultation on how to make your current investments grow, please feel free to call me, as I can tell you lots of other ways to invest in Real Estate!

Check out my website www.MaryandAsh.com  or call or text 619-987-5291

I am always here to help anyway I can!! "I get paid on results not promises" 

 

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Home Buying
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California San Diego County San Diego
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