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Investment Properties Scenario #1 - You want to become a Real Estate Investor. Our organization will assist you in securing the loan to invest, whether it's a mortgage loan for existing property, a construction loan to build from scratch, or rehab loan to invest in a fixer-upper. We will construct the new build or locate the perfect fixer-upper to guarantee a profit in the immediate future. Whatever your needs, we are licensed in all three industries to fulfill them. Lender/ Realtor/General Building Contractor. Know your time horizon As with any other investment, you should have a good idea how long you plan to own a rental or investment property before you buy it. The longer you plan to own the property, the more you’ll probably need to invest in maintenance, repairs and improvements. If you’re keeping it for 20 years, at some point you’re going to be putting a new roof on that property. You’re going to be putting in new appliances and doing some major repairs. If you’re only planning to own a property for five years, by contrast, you’ll probably want to avoid making any major improvements unless you’re sure you can recoup the cost with a higher sale price. You also may face more investment risk with a shorter time horizon. Although your rental or investment property will almost certainly appreciate over 1- 20 years, it could easily lose value in the next five, particularly if you’re buying in an over heated market. You’ll need a bigger potential annual return to make up for that risk. For many small investors, long-term ownership makes the most sense, You’ll have plenty of time to ride out any swings in the 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. Develop a Network Experienced landlords find their properties in a variety of ways. Some hunt for foreclosures, making friends with city hall clerks or bank employees who know which properties are about to be sold. Some run ads in local newspapers. Others work with real estate agents who keep their eyes peeled for possible buys.Several landlords recommended joining a local landlord or property owner's association to make contacts. Our Web site offers links to local groups, as does the National Real Estate Investors Association. “When you begin to own rentals, all the other investors start coming out of the woodwork,. Through investor meetings, networking, etc., we can find out what is for sale.” You also can try approaching landlords directly to see if they’re willing to sell, by calling the numbers listed on rental ads in the classifieds, by cruising neighborhoods looking for “for rent” signs or by talking to any landlords you know personally. (Easier to hire HASSAN HOMES). If being a landlord got to be too big of a hassle, one option would be to get rid of the tenants and make it your home or simply sell. Get your finances in shape. The better your credit, the less credit cards and other consumer debt you have, the better your prospects for getting a decent loan. Lenders usually require bigger down payments, higher interest rates and generally stronger finances when you’re buying rental property. That’s because they know people are more likely to default on investment property than they are on their own homes. Landlords say it also pays to have a substantial cash reserve left over after buying a property. This can help pay for unexpected repairs and vacancies. Although there are few rules of thumb, setting aside at least one month’s rent for each unit is a good start. Our Organization suggests having a line of credit, secured either by the property or your own home, in order to cover larger costs. You also should make sure to save enough for retirement and other goals before investing in rental real estate. While rental income can supplement your retirement kitty, most people shouldn’t count on it to replace other investments or allow themselves to be entirely exposed to the whims of the local real estate market. Rents and property values can fall as well as rise, and those who are adequately diversified with investments in stocks, bonds and cash will be better able to endure the bad times as well as the good. Avoid overpaying As one experienced landlord put it: You make your profit when you buy a property, not when you sell it. Pay too much, and you’ll never recoup as much as you could have if you had driven a better bargain. The rental real estate market is generally tougher on investors who overpay than on homeowners who do the same thing, several landlords said. While a home is often an emotional purchase, which can lead to “I must have it!” offers and bidding wars, most landlords look strictly at the numbers to see if their investments will pay off. If you pay too much for a rental, you can’t count on a “greater fool” coming along later to bail you out. Not overpaying can be tough in a hot market, however. Properties & Apartments in Arizona 2005, for example, currently sell at a 15-20% premium over their “inherent” value. In other words, they’re selling for much more than the income streams the apartments generate, according to Reis, a national real estate research firm. In San Francisco and Los Angeles, the premium is 10%. Some landlords use formulas, such as not paying more than six to eight times the rents they expect to make the first year. Others try to estimate what the property could be worth after needed repairs and upgrades are made, and they don’t pay more than 70% of that price, less the cost of those repairs. Every real estate market is different, however, and these formulas may not work in your area. What’s key is to make sure your rental income will cover your out-of-pocket costs. That includes the mortgage payment on the property, as well as taxes, insurance, maintenance,repairs and a vacancy rate of around 5%. (If you have five units, for example, you should expect at least one unit to be empty three months each year. Here’s the math: 5 units times 12 months equals 60; 60 times .05 is 3.) If you can at least break even, you’ll be able to profit from any price appreciation as well as from tax breaks available to rental property.When crunching the numbers, you should know that there’s a big difference in how repairs and improvements are treated for tax purposes. You can typically deduct the cost of a repair, such as patching a roof or fixing a leaking pipe, on your tax return for the year in which the repair is made. Replace that roof or those pipes, however, and it’s typically considered an improvement, which means the cost can’t be deducted. Instead, it’s added to the amount you paid for the property to determine your tax basis when you sell. The higher the basis, the lower your taxable profit. But if you have to wait 20 years after making a major improvement to recoup any of the cost for tax purposes, you may think twice about buying a property that needs a lot of upfront work. To better estimate your costs, get a thorough inspection before you buy a property. Some landlords have favorite electricians, plumbers and contractors that they send to any prospective property, promising them that they can do any repair work they find. Others use professional inspectors they trust. Longtime landlords say all this work pays off in profitable properties that build their net worth while providing a steady income stream. it’s a way of life we recommend. It doesn’t matter if you’re a professional or a laborer,“It’s the equal-opportunity wealth builder.”