Owning an Investment Property: The Do's and Don'ts!

The idea of owning rental investment property seems to be gaining popularity as investors concerned about the stock market volatility. Note not everyone has what it takes to be a rental investment property owner. For some people owning rental investment properties is a good way to build prosperity and wealth. Once you have made the decision to buy rental real estate, your real effort just begins. Finding a cost-effective rental property takes time, research, relations and plenty of calculation. Here's what one needs to know to get started:

Knowing your investment time

As an investment property owner, you should have know how long you plan to own an investment asset before you purchase it. The longer you arrange to own the investment property, the more you will need to invest in repairs/maintenance and improvements. For example, If you are keeping the real estate for thirty years, at some point you will be replacing a new roof on that building. You are also going to be replacing he kitchen appliances and doing some major renovations. If you're only planning to own a property for seven years, by comparison, you will want to keep away from making any major repairs unless you are sure you can recover the improvement cost with a higher sale value. In addition, you may face more investment risk with shorter time duration. Although your investment property will almost certainly appreciate over fifteen years, it could easily lose value in the next seven years, mostly if you are purchasing in an overheated market. You will need a bigger potential yearly gain to make up for that risk. For many small real estate investors, long-term ownership makes the most sense. You will have plenty of time to work out any changes in the real-estate market, and rental income can make a nice supplement to your day job. Find enough rental properties, and being a landlord may become your day job.

Build up connections w/real estate sellers

Knowledgeable real estate investors find their investment properties in a numerous ways. Some look for foreclosure properties, developing friendship with city hall clerks or mortgage-bank employees who know which properties are about to be auctioned or foreclosed. Some place classified ads in a local newspaper. Other investors work with experienced real estate agents who keep their eyes peeled for good buys. Some landlords recommended joining a local real estate investment owner association to make new contacts.

Maintain your real estate network

When you begin to own investment properties, all the other rental investors start coming out of the woodwork. Go to local real estate investor meetings/networking and find out what is for sale. You also can try approaching investment property owners directly to see if they're willing to sell, by calling the numbers listed on their rental ads in the classifieds, by driving neighborhoods searching for "for rent" signs or by talking to any real estate investors you know personally.

Keep a robust finance

The better your credit the better your chance is to get a loan from the bank. Lenders usually require bigger down payments, higher interest rates and generally stronger finances when you are buying investment property. That's because they know people are more likely to default on investment rental property than they are on their own houses. It’s highly recommended to have a substantial cash reserve left over after buying a rental or any other investment property.

INVESTMENT PROPERTY