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Buying Investment Property:We have all seen the late night infommercials that are trying to sell you some investment property in Las Vegas, Florida, or Los Angeles. Many people want to know how to buy an investment property, or how to get an investment property loan (mortgage)? The last 10 years have produced a real estate boom across the country, although certain areas like Orlando and California have been the big winners. I bought a house in Las Vegas in 2004 and in only 3 years I have built up about $75,000 in equity (not bad considering I would have had to pay rent to live in an apartment as my other option). The real trick with owning investment property is knowing when to sell. If you hold on to long to a property you might incur some huge expenses like a new roof, bathroom plumbing, or even structural damage on an older house. These expenses can cost thousands of dollars and eat up all your profit that you have built up in your real estate investments. Unfortunately knowing when to buy and sell real estate is mostly speculation and a big guessing game. Over the years real estate has gone up in value and it probably will continue to do so, but at what % will prices rise and in what city? If you can, hold onto whatever real estate you own for as long as possible, but remember that real estate investing comes a big risk so be cautious. We have reviewed a lot of topics dealing with real estate investing and hopefully it will save you a little time in your search.
Buying an Investment Property as a Rental Property:Buying investment properties is a good idea if you can afford to take the risks involved and you have a long term goal. The average appreciation for residential real estate in America is 6 % a year over the last 20 years. If you bought a house for $100,000 and held it for 20 years you would have a good chunk of equity sitting in your property (about $140,000). Now you have to take into account all the repairs, property taxes, mortgage payments without a tenant, and all the unexpected bills that come with owning a home, but if you plan ahead you can still make some good money. I bought a 3 bedroom, 2 bath house in Las Vegas for $150,000 in 2004. The house is currently valued at $235,000 (as of the most recent appraisal) and I owe $165,000 because I refinanced the house to take some cash out. I have bought another home in Las Vegas and now I rent my old house for $1150 per month. My mortgage on the old house is for $165,000, and with a fixed 5 year interest only loan at 6.75 % my monthly payment is only $1035.00 (including taxes and insurance). This means that every month I will make $135.00 in income from renting the house while I hope that Las Vegas has another real estate boom and my equity continues to build. Since I still live in Las Vegas I have decided to manage the rental property myself, the other option would be to hire a property management company to handle the month to month issues. Property Management companies usually charge 10 % of the monthly lease as their fee (although it is negotiable in certain areas). The most important rule about owning rental property is to find a house (condo, or townhome) that you can rent for an amount equal to or greater than your monthly mortgage. Some wealthy investors will buy properties that they rent and take a loss every month, but unless you are rich or have inside information this decision could really hurt you in the end. Another good idea is to talk to local realtors in your area about rental prices and vacancy rates. This information is valuable and will help you determine how easy it is to rent a house in your neighborhood (and how much $ you can get in monthly rent). Realtor.com is a great website to check out and get an idea about prices in the area you want to buy property in.Where to Buy a Real Estate Investment Property:There is never any guarantee as to where to buy real estate for investment purposes. The last 5 years has really been hot for areas like Orange County, Dallas, Las Vegas, Florida, and of course Los Angeles when it comes to real estate. Another thing to consider when buying and selling real estate is the capital gains tax that you have to pay to the government. If you live in a house for 2 of the last 5 years then you can keep up to $250,000 that you make in equity (profit) on the sale of the house, and up to $500,000 for married couples. Any money over that amount is considered taxable income and you can bet the government is gonna want their cut. For more information on capital gains taxes check out www.moneychimp.com/features/capgain.htm where you can use their capital gains tax rate calculator. The one theory that most investors agree on when it comes to real estate is to try buying property in the city you live in (especially if you are new to buying and selling houses). Obviously if you live in Florida this theory is gonna work better than if you live in Milwaukee, but there are reasons for buying locally. The main reason to buy investment properties near where you live is so that you can manage the property and tenant. If you live out of state and there is a problem with your rental house how are you going to fix the plumbing in the middle of the night. Repairs can get expensive and it's a lot cheaper if you can do some of the fix it stuff yourself. The other advantage of buying property in your city is that you will have some insight on the local real estate market (where the good schools are, high crime areas to avoid, etc.). The last piece of advice is to avoid buying a property at the high point in the market (when prices have hit their peak) as it is hard to build equity once a local market slows down and no one is buying homes anymore.
Getting a Loan/Mortgage For Investment Property?:Are you trying to find a lender that will handle your loan or refinance on your investment property? Usually when you buy a home as an investment property the bank (or lender) will charge you a higher interest - called points in the mortgage business. Before shopping for a home loan you should do a couple things to better your chances of getting a good interest rate. First thing to do is to check your credit and make sure you have no mortgage lates or deliquent accounts under your name (bad accounts or late payments can greatly affect your credit score). Another thing to look for on your credit rating is charges or accounts that you did not authorize, identity theft is a major problem and you don't want to be a victim. Also you would be wise to have some money in the bank, hopefully as much as 20 % of the purchase price so you can make a big down payment on your investment property (if you put down 20 % then you don't have to get mortgage insurance known as PMI). If you want to get some mortgage quotes or refinance rates then check out www.nevada-homeloans.com for a free analysis.
Investment Property Courses and Seminars:Do you want to learn how to buy investment property and real estate? There are many ways to learn about real estate and the investing that goes with it, but a great way to learn is to attend a seminar or class. I'm sure you have seen Carelton Sheets on your late night television telling you how easy it is to make money in real estate and buying homes in foreclosure. We reviewed a lot of websites that offer courses on real estate investing and we would recommend you go to prospersuccessinrealestate.com where you can register for free and start to receive information. There are a lot of scams and misleading advertisements when it comes to investment properties, so your best move is to gather information that is free and do your research. Never be rushed into buying a home, or signing up for a seminar, instead just move slow and learn as you go.
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