Real estate investment can be lucrative and extremely profitable as long as you adhere to the old age principle of “location is everything”. Real estate investing strategies can be classified into ownership, purchase, management or sale of any type of real estate for profit and sometimes a loss.
Investing in real estate requires you perform due diligence and it may be best to assume the seller will tell little lies to move the property at a premium price.
You must remove your emotions from any real estate transaction you’re considering and focus all your attention on the financial numbers.
If you fall in love with a beautiful property that is losing money, you’re entering a real estate investing dead zone. Stick to analyzing the current rental income and never buy a commercial property based on future potentials.
Types of Real Estate Investment Property
Single family homes – this is sometimes the easiest and most common type of real estate in America today. It is always a good idea to own your own home. Single family homes might also fall under the terms: co-ops and condos. When you own a single family home, your income is the sole consideration used by the bank when you apply for a mortgage loan.
What do you do when you lose your job? How are you going to pay the mortgage? While single family homes sound romantic and desirable, your first real estate investment should be a three to four family housing unit.
Multi – Family Housing – real estate with two, three or four rentable units is considered multi family. This type of real estate should be your first deal. Qualifying for a mortgage loan on a four family home is easier than on a single family home. The rental income from the other units would be combined with your income and used as the basis for qualifying for a mortgage.
If you do lose your job, the income from the other three rental units would come in handy. The only downside is that you have to deal with tenants and some can be straight from hell. From my experience, the best way to handle rental property tenants is to treat them like a business. Some tenant and landlord principles to adhere to: