Why Buy Investment Property or Do I Want to be a Landlord

March 8, 2010 · Posted in Property Valuation · Comments Off 

First lets look at the advantages to buying a multi unit property

Cost per Unit: multi family housing is generally cheaper. The cost of a duplex is less than the cost of two homes. Less debt and therefore less risk also means you have the potential to own more of your property than the bank.

Vacancy Rate

By definition, a multi family property is never 100% vacant, meaning there are always some renters helping to pay expenses. What happens if you lose your tenant in your single family house? You lose all of your income and you have to pay the mortgage out of your savings. If you lose a tenant in a three family house, you’ve only lost one third of your income. The other two units will help cover your mortgage until you rent the vacancy. One reason why owning small apartment houses is smarter that owning single family homes.

Easier to Finance

Get financing more easily. Money for commercial units was available even during the recent mortgage freeze. For a few weeks in late August to Early of 2007. I think that this is due to less risk, because multi family is less expensive per unit and because there are always some tenants helping to cover costs.

Financing is more available for multi family because investment property can be analyzed using financial ratios like cash flow or cap rates. Lenders love to be able to assess the investment value of a property. You can price a property according to the return on cash flow or gross rents and create benchmarks. Its not emotional.

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Handy Tips On Real Estate Evaluation

October 25, 2009 · Posted in Property Valuation · Comments Off 

Real Estate investments are highly lucrative venture now a day and can be done with ease. Yet you can in a short period of time loose hefty amount of money even with evaluation and proper tools to find a property with great potential in a healthy market. You can go for the following tips to increase your odds of winning.

The Internet has revolutionized the whole method of operation of what is well put as ‘finding diamonds in the rough’. Useful legal information, photos, prices and descriptions related to properties located miles away or within your locality can be easily found on net. Be prepared for payment of realtor fees if you’re limiting yourself to ads of ‘For Sale By Owner’ (FSBO) on Windows Classifieds, Google Base or eBay.

Visiting estate agent or realtor businesses is always a good approach. Obtaining an MLS (multiple listing service) provides you with all the information they receive if its within your affordable limit. Even if you do come up with that kind of cash, a special license is needed in some areas.

Don’t ever cut back on legwork even if you find a property of great value on the net. Visiting the property you’re interested in and the area surrounding it is the only way to arrive at a proper judgment properly. There is no shortcut around it. Make sure that the neighborhood isn’t such that might decrease the property value dramatically in future. To make sure speak with the neighbors and look for rent, FSBO signs when you’re driving around. Read more

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