Buy Income Property

Learn How to Buy Income Property and Invest in Real Estate

Although I'm not yet the most experienced real estate investor, I put together this site to help other people like me, who really wanted to invest in real estate but that didn't really know how to get started. I'm hoping that by listing out in an organized manner the steps needed to buy investment property, that it will both answer many of your questions and help you take the plunge into the lucrative and rewarding business of owning real estate investments. 

The best way to navigate the site is to go through the sections in order using the navigation buttons at the bottom of each section, however, if you want to jump from section to section feel free to use the navigation toolbar at the left of the page.

Click here for the first lesson:

Our site is really like a quick and dirty investment course in real estate that covers the following areas:

Determine your real estate buying goals

What are the exact reasons you are investing?  Are you looking to build steady income?  Are you looking to amass a lot of capital and benefit from capital appreciation?  Do you prefer to maximize tax advantages that real estate can offer?  Or are you looking to diversify your portfolio to hold more than just stocks and bonds?  Whatever the case, you should know your goals before you start your quest.

Determine a strategy to buying income property

Is it to acquire as many properties and as large of a portfolio as you can? To minimize the number of tenants (problems) that you have? To buy properties in specific areas? To make as much positive cash flow as possible? To make as much capital gains as possible? To use the maximum amount of leverage as possible?  Choose your strategy before you begin.

Determine your means

In other words, how are you going to afford your purchase?  How are you going to raise the money and finance it?  What price range can you comfortably shop for?  How much do you need to save for a down payment?  Figuring out these factors will help you when it comes time to narrow down the search for your property.

Where to buy income property

The old adage goes something like, real estate is all about "location, location, location".  Location really does matter. You'll need to search around for the best city, neighborhood and even the best block to buy your property. Do you want to buy in a low cost area that may turn around sometime soon, or do you want to buy an upper end apartment building?  Choosing where to buy your property will dictate what type of tenants you have and the amount of work you will have to put in to your property on a regular basis.

What type of property to invest in

Property investments can consist of nearly any type of real estate.  Typically, the more simple the investment, the lower the expected return.  For example, buying vacant land is the easiest investment, but the returns are usually pretty small and sometimes take years to create.  Other types of property include single family homes, apartment buildings, townhomes, condos, and even commerical buildings.  As the complexity increases in each type of real estate investment, you will need to learn more, but you can also make more.

How to find a property to buy

The easiest way to locate a property is to start searching on the MLS, but there are many other ways too.  You can always hire a realtor or real estate agent to help you search and complete the sale.  You can also get your real estate license in order to save money on the transactions, which is especially useful if you plan to buy or sell a lot of properties.  Finally, if you are good at marketing and negotiating, there are lots of ways to find properties to invest in that aren't even on the market.

Financial ratios for investment property

When you start analyzing investment properties, you'll need to get familiar with the debt ratio and total debt ratio. Knowing what these ratios are will and where the lenders want these ratios to be will save you time when it comes to getting financing.

How to analyze cash flow

Analyzing investment property cash flow means learning about, measuring, and analyzing the following figures: revenues, costs, cash flow, after-tax cash flow, monthly return, return on assets, return on investment, the payback period, and the years to breakeven.  Get familiar with these figures and use them to help you measure your success.

How to make an offer on real estate

There are several tricks that can help you make a good offer that will be accepted.  They all include doing your research using online tools and assessor offices to find a reasonable number.  By being more creative, you can increase your chances of getting a better deal.

Finance your property investment

There are several ways that you can use to finance your investment property.  The most popular include getting a mortgage or second mortgage, but you can also use a line of credit, hard money loans, seller financing, use equity from another property or even find a special loan program that suits your needs.  In addition to these, there are several creative ways to finance your investment property that are covered by our site.

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