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Your first rental properties - duplex, triplex, fourplex, single-family
house or condo.
Selecting your first properties is very important step. If you choose poorly
in the beginning, you will most likely not go past the first property to
acquire wealth in real estate.
Learning what to look for and when to buy a property are essential to your
success. There is no single formula for every investor however, most
first-time investors do best when they start with small apartment buildings
with 2-4 units. The reason for working in this type of property lies primarily
in financing. Fannie-Mae guidelines apply on all residential properties up to
4 units. What this means to you is that you is that you can purchase
properties with 90%, 95% or even 100% financing. Unlike
"commercial" properties such as 5 or more unit apartments, office buildings
etc. which are financed only with commercial loans, these
"residential" properties can be financed using "home loans".
Duplexes can be good investments for investors who will live in one of the
units, but they generally don't produce enough income to pay for themselves
when they are not owner occupied. Buildings with four rental units typically
are ideal first investment. The cost of these buildings is usually manageable,
and the financing often is quite attractive because the buildings can be
purchased with as little as a 0% down payment when the purchaser will live in
one of the units.
A four-unit building offers many advantages.
If you don't plan to live
in the apartment building, you have four rental units to pay for the property.
If one unit goes vacant for a while, you still have three units to help pay
the mortgage. It's possible to buy buildings where three units cover your
costs and fourth unit represent profit. Creative financing usually is not very
effective with four-unit buildings because the loans generally are sold on the
secondary market and must meet more stringent criteria.
Triplex are buildings with three rental units. Normally, they are better
than duplex, but not as good as four-unit buildings. When you make your
choices, don't be blinded by the sales price. A cheap buildings is not always
good bargain. You have to run the numbers on any property to see whether it is
viable purchase.
A lot of investors consider buying a single-family house or condo as their
first investment property. This can be okay if you will live in the home,
but a single dwelling generally is a poor investment for purely financial
purposes. The cost of most homes is too high to expect the rental income to
cover the cost of mortgage. The ideal way to use a single family home as an
investment is to purchase the home as your primary residence, then when you
are ready to move lease it out instead of selling. As you develop a history
of rental income you can refinance the property and take the equity and
reinvest in another property hopefully a 4 unit or larger.
To obtain an accurate assessment of any data you're
receiving online,
property analysis, market conditions or to discuss
problem properties . . .
Why not call me today
?
TOM ANDROS
Direct:
909 985-4898
| 800 403-1139
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Sell 
