When you are deciding what features your target investment property needs to have, you don’t need to rely entirely on what someone else says is important. You should use your own needs for determining what to look for. However, it may sometimes be useful to consider points that are also important to other investors.
For instance, Ken McElroy, author of “The ABCs of Real Estate Investing,” prefers to buy properties of “substantial size,” so that they will pay for the hiring of property management. He prefers not to manage himself. It would probably be a waste of his time to do so anyway. By hiring a property manager, he is able to be out looking for even more properties, to make even more money.
Another thing that should be part of the litmus-test for everyone is whether or not the property is going to require being rehabbed. McElroy refuses to consider properties past a certain age. Even if such a property were in good shape, which is usually unlikely, it will probably be lacking some important features. You will not be able to charge as much rent as with other rental units. You will have to spend more effort and expense getting these properties up to code. Why bother with property like that when, with just a little more effort, you can find something that needs less maintenance and will bring a heftier rent?
Remember how important the location is when thinking about real estate. When choosing your sub market, remember that the majority of people would prefer to buy rather than rent. Therefore, unless it is significantly more expensive to do so in a particular area, you will have trouble finding and keeping tenants.
McElroy also tends to target out-of-state owners who own only 1 or 2 properties in a particular city. Many times these owners do not keep the investment properties up to the level at which they could operate, because they originally underestimated the cost and time it would take to manage out-of-town investments. Sometimes these owners are very happy to let someone take their properties off their hands.
Whatever kind of deal it looks as though you will be able to arrange on a given unit, be careful you don't buy something at a “good” price if it is in a undesirable location. Remember that the only reason you are purchasing investment property is so that it can make you money. If it is not going to generate income, then NO price is a good price. It won’t going to make money if it is in a poor neighborhood. It is not going to make money if it is in a community who don’t have jobs. It is not going to make money if it is in an area that everyone is moving OUT of. If there are no people, there won’t be any renters either.
These are some of the qualities that you should consider when looking for potential purchases, and they will help you on the road to discovering what exactly you need in a property for investment. Your focus is finding good opportunities that will make you money. Look for investments that are in prime locations and good condition. Make sure the properties are where the people are and where the people want to be. If you keep these things in mind, everything else will work itself out for you.
Article Source: http://www.orbitaloc.com/
Alex Anderson Specializes In Connecting Investors With Money-Making Real Estate Investment Property. If You Are Interested In Real Estate Investing - Visit Alex's Website For A Free Copy Of "The Investor's Rental Guide" At: www.GreatInvestmentProperty.com.
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