There are many places to find available properties: MLS listings, your local newspaper, word of mouth, loopnet.com, or a For Sale sign at the property. You can also join local chapters of the National Real Estate Investor Association or Real Estate Investment Club. They’re great sources of information for both the novice and expert investor.
Want to keep your search simple? Find neighborhood that you like and look for signs. Also, keep an ear out for multi-property owners looking to get out of the business.
Now, what do you do when you find a property that looks good to you?
When you locate a property you’re interested in, there are several important questions to ask, including:
- Is the building fully occupied?
- Are all tenants paying rent? If not, why not?
- How do the property's rents compare with other comparable rentals in the area?
- What’s the local area like? Is the building close to schools, parks, transportation?
- Is the area renter-friendly? What’s the turnover rate?
- Does it offer appropriate amenities for the rent charged?
After you’ve gotten the answers to all of the above questions and the property still looks appealing, ask to review the owner's Schedule E, Supplemental Income and Loss statement, which will show the latest rental income information and all related expenses on the property. This will give you a good idea about the kind of cash flow you can expect if you make the purchase.
You should also make sure there are no environmental concerns at the property. Once you become the property owner, those problems become yours, so be sure to ask the current owner if any such problems exist. Lead paint is also a potential issue, especially if you’re renting to families with small children. It’s expensive to clean up, and a serious liability if you don’t.
Finally, get a home inspection. Though they aren’t required by law, this is a great way to learn about any issues that exist and potential problems that might come up in the near future. You can never be too careful or thorough when you’re making this kind of investment. A little cash up front can save you from losing a lot of cash down the road.
If the thought of locating just the right property sounds overwhelming, your first stop should be the credit union. Just pick up the phone and call me at (781) 698-2186 or email me at firstname.lastname@example.org. I've been in this business for a long time and can offer suggestions about brokers, properties, and loan options.
You can also learn more about investment property ownership and financing an investment property by downloading our free eBook.
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