Investing 101

There are many good reasons to invest in properties.  It is one of the only ways that you can get someone else to pay for your investment.  Your tenants pay the loan, increase your equity, and give you a cash flow.  Make your money go to work. 

Things You'll Need: Purchase Agreement, Real Estate Agents, Real Estate Attorneys, Tax Services.

·        Determine what type of rental property appeals to you - a single-family residence, multi-family unit, commercial property, or a vacation home.

·        Narrow your search by focusing on available properties in a particular area.

·        Obtain comparable prices for similar properties in the area from a local real estate company.

·        Estimate possible rental income from a particular property, based on current rental prices for similar properties, found in the classified section of your local newspaper.

·        Determine possible cash flow (or loss) for the property by subtracting taxes, insurance, mortgage payment, maintenance, repairs and other expenses from the estimated rental income.

·        Consult a tax advisor about the tax consequences of investing in rental property.

·        Ask an attorney or real estate agent to review all contracts and agreements before submitting an offer.

·        Make an offer based on comparable prices for similar properties in the area, subject to appraisal, loan approval and thorough inspection of the property.

·        Determine who will manage the rental property

And why stop at one property?  As you increase your cash flow and reinvest the extra income, your money will slowly start to compound as you add more properties.  There is no need to make the process too complicated.  As you become more knowledgeable in the field of real estate you can start to contract out the tasks you don’t want to do.  For example, pay someone else as a management company to take direct control of the property.  Just stocks or bonds, you can spend your time and energy or get someone else to do the legwork.