Investment Property
| First Time Investor |
HOW SHOULD I START?
Start by analyzing communities and subdivisions so you can feel
comfortable investing your money in those areas. Remember, you are the
one making the final decision on this purchase. Real Estate is a "constant
study". The most remembered phrase I remember from my mentors was "you
make your money on the buy". Don't expect to purchase a property at a
high price and then expect to sell it at an even higher price. In Real Estate,
time has a direct relationship to value.
Start by analyzing communities and subdivisions so you can feel
comfortable investing your money in those areas. Remember, you are the
one making the final decision on this purchase. Real Estate is a "constant
study". The most remembered phrase I remember from my mentors was "you
make your money on the buy". Don't expect to purchase a property at a
high price and then expect to sell it at an even higher price. In Real Estate,
time has a direct relationship to value.
| Find a Mentor Study the Area Learn to Calculate a Good Purchase Price |
HOW SHOULD I PAY FOR THESE INVESTMENTS?
All my examples are shown with cash purchases. Naturally you can finance
these purchases. I have found that lenders will loan 75%-80% on a Loan to
Value basis. This is based on your ability to repay the loan especially if the
rent should stop. They will require the regular requirement of any loan such
as income verification and debt ratios. If you have low debt and really high
scores you may be able to borrow a high loan to value amount, say 90%
All my examples are shown with cash purchases. Naturally you can finance
these purchases. I have found that lenders will loan 75%-80% on a Loan to
Value basis. This is based on your ability to repay the loan especially if the
rent should stop. They will require the regular requirement of any loan such
as income verification and debt ratios. If you have low debt and really high
scores you may be able to borrow a high loan to value amount, say 90%
HOW DO I MANAGE THE INVESTMENT?
Management of your property is the most important aspect of successful
investing. Being prepared to react immediately to a non-paying renter by
knowing the procedure your county requires in order for you to evict a
tenant is another major study. Bookkeeping is another factor you need to
consider. Don't think you can do it later, it must be done everyday with
financial statements produced on a monthly basis.
Management of your property is the most important aspect of successful
investing. Being prepared to react immediately to a non-paying renter by
knowing the procedure your county requires in order for you to evict a
tenant is another major study. Bookkeeping is another factor you need to
consider. Don't think you can do it later, it must be done everyday with
financial statements produced on a monthly basis.
HOW DO I GROW THE INVESTMENT?
Growing the investment will happen in two ways. Normal appreciation is one
but remember that your property has to be in a neighborhood that is able to
maintain appreciation and not in a neighborhood that is unstable.
The second way to grow your investment is by increasing the Net Income. This
is done by either reducing costs through lease negotiation OR increasing
rents with periodic rent increases. A small monthly rent increase goes straight
to the bottom line and increases the NET INCOME to be used in your IRV
calculation.
Growing the investment will happen in two ways. Normal appreciation is one
but remember that your property has to be in a neighborhood that is able to
maintain appreciation and not in a neighborhood that is unstable.
The second way to grow your investment is by increasing the Net Income. This
is done by either reducing costs through lease negotiation OR increasing
rents with periodic rent increases. A small monthly rent increase goes straight
to the bottom line and increases the NET INCOME to be used in your IRV
calculation.
HOW LONG SHOULD I HOLD THE INVESTMENT?
The length of time to hold is determined on your portfolio plans. Some
people want to continually rent the same property and others want to
upgrade the investment into something bigger or better. If you decided to
sell it is important that you Study the IRS 1031 exchange. Simply stated that
allows you to defer the Capital Gains you make on your investment as long
as you adhere to the IRS guidelines.
The length of time to hold is determined on your portfolio plans. Some
people want to continually rent the same property and others want to
upgrade the investment into something bigger or better. If you decided to
sell it is important that you Study the IRS 1031 exchange. Simply stated that
allows you to defer the Capital Gains you make on your investment as long
as you adhere to the IRS guidelines.
| MID FLORIDA REAL ESTATE BROKERAGE Office 352-589-0444 Fax 352-589-8381 Toll free 1-877-405-0444 email here for info@mid-fl.com |
HOW DO I FIND THESE PROPERTIES?
You find the properties as foreclosures, tax sales, for sale by owners and
anyone, who because of circumstances, wants to convert their real estate
to cash. As I mentioned earlier, there is a Lot of Study to be done. One of the
major areas is owner financing.
You find the properties as foreclosures, tax sales, for sale by owners and
anyone, who because of circumstances, wants to convert their real estate
to cash. As I mentioned earlier, there is a Lot of Study to be done. One of the
major areas is owner financing.
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