Category: Income Property

Review What You’ve Learned!

Posted on by David Aston

You’ve learned an incredible amount of information in this course. Hopefully, you’ve not only taken it all in, but have also been putting the information into action. It’s okay to be cautious if you’ve never done this before, but you have to get out there and make it happen!

It can always be helpful to see information written in the form of a summary. It can help you get your thoughts in order. Also, breaking things down can help it to seem less daunting. Follow these steps, and you’ll be well on your way to financial freedom with real estate rental properties.

First, you need to lay out your goals. What do you hope to accomplish by buying your first property? Do you think you will want to expand from there? Do you think this will be a very long term investment, or do you plan on selling in a few years? Keep in mind that this is generally a longer term strategy.

After you’ve settled on your goals, you need to think about the area you are interested in. Consider what the people in that area want when they are looking at a rental property. In general, you can be more profitable more easily with a multi unit property than with a single family home. You can also save some money and get a better loan if you’re able to live in one of the units yourself.

Consider whether you’ll want to be a very hands-on landlord or not. In some cases, you may want to hire a property management company who can take all of those late night phone calls for you! It can be a lot less stressful to have a management company on your side. However, you can save a lot of money by doing things yourself or with a team.

This directly relates to maintenance as well. You can save a lot of money if you’re willing to do the repairs yourself. However, you might not know how to do them! You have to figure in what you will need to pay for repairs, because it will eat into your profits.

Once you’ve settled on a property, you need to shop around for a good loan. In fact, it’s a good idea to get pre-approved as soon as you’ve settled on a general area. That way, you’ll go in knowing what you can afford. Working with a realtor is a great way to find some of the best properties in the area. Work with someone who is familiar with rental real estate and you should be good to go.

After you’ve negotiated with the seller and have submitted your letter of intent, you will move into the contract phase. Finally, it will be time for closing! Just be sure you’ve gone through everything with a fine-toothed comb, including rent rolls, expenses, and so on of the pervious landlord.

You’ll need to have a good lease set up before hand. You don’t want any surprises when you’re dealing with tenants. If you’re a good landlord who takes care of things right away, people will want to stay with you as a renter. This can decrease your vacancy loss, and put more money in your pocket.

As time goes on, you may want to expand your rental real estate empire. You can even turn this into a full time, profitable business. Just imagine what your long term net worth will be once your investments increase in worth over time!

Getting into rental real estate is a great business. Set yourself up for success by educating yourself and taking action, and you’ll be well on your way to success!

How to Choose a Second Rental Real Estate Property to Buy

Posted on by David Aston

A successful initial foray into real estate investing does several things. Firstly, it vindicates your beliefs. You have now proven that you could indeed do what you had believed you could do all along. It also gives you valuable experience which you can take forward into your next property investment, making that even more likely to succeed than the first one. Finally, it provides the capital, or at least the promise of capital, with which to fund your possible expansion.

There is always an instinctive belief amongst investors that a more expansive and highly leveraged investment always carries more risk. This is not necessarily the case in real estate. The conservative investor, who uses a lot of his own money, borrows very little, and then has occupancy problems for an extended time, is a good foreclosure risk for the lenders. There is plenty of equity in the property which they can instantly take back. A more aggressive investor, with a highly leveraged system, is actually more likely to survive an economic downturn, since there is little point in the lender seizing back a property which will give them a loss.

If they work with the investor through the downturn, they can still make significant long term profits. With this in mind, it is strongly advised that you leverage your investment. The downside is limited, and by having more than one property you are moving away from the situation where your entire portfolio is either 100% occupied or 100% empty. All the time, you are reducing the amount of risk which your business is subjected to. Your long term goal of a stable and dependable income.

It is also a good idea to build on the success of the first property by staying very close to it geographically. You will save money on maintenance and administration by reducing the distance between the properties, and you could also find that the good tenant in the first property has friends of a similar age and interest group, who would make ideal tenants for the other property. Anything you can bring to the new project which has worked with the old one increases your chances of success.

One of the greatest benefits of all has yet to be mentioned, and that is the reputation you should now be building up with the banks or lenders who financed the original investment. Having borrowed money and created one successful project, you will now be able to negotiate better terms with the lenders who will be fighting to help with the next one.

This is not limited to institutional investors, either, as you now have a proven case to show a private investor who is looking for a tax efficient, but still profitable, investment. You can even arrange to locate and manage properties for these investors in exchange for commission, bringing in extra income without risk. This can then be re-invested back into leveraging further properties, helping you to build your empire as soundly as possible.

Refinancing a Real Estate Rental Property for Even more Profits

Posted on by David Aston

Refinancing real estate rental property is something which can be of great benefit, if you know how to carry it out safely. Of course, nothing in finance is ever truly free, and there are fees which the lender will impose upon you. These need to be factored into any projection you make as to whether refinancing will be a good idea. This is assuming, of course, that the goal of your refinancing project is to raise more money for investing in other properties. It certainly does not need to be. There have been many property investors who would simply take this money and spend it, counting it as a tax-free reward for their effort.

If you have any ambition to build up a property portfolio which can keep giving you money for many years to come, it is best not to weaken it by taking money out in this way at the start. Refinancing for re-investment makes a lot more sense, and it should still be possible to gain a positive cash flow. It is also possible to refinance a property, and then use the proceeds to diversify and invest into other things such as stocks or bonds.

A lot depends on your personality. If you are definitely a hands-on person, with a liking for having control over the important investments in your life, you will probably want to stick with property. You control most of the variables here, and operate in an imperfect market. If something is not working, you can change it. When you invest in other financial instruments, you are extremely limited as to what you can do. If the price does not move, you can do nothing to make it move. You can develop some degree of control with disciplined trading, and by knowing how best to react in certain circumstances. The point is, though, that react is all you will be able to do.

Assuming you choose to refinance for further real estate growth, you have immediately reduced one of the biggest risks inherent in this type of investing. When you only have a limited number of properties, especially if you only have one, you are at the mercy of a sudden departure of your tenant reducing your income to zero. Diversification brings a far greater degree of safety. It does make sense to diversify with another property of a very similar type, though, so you can use the insights and knowledge you have gained from managing the first property to good effect.

Speed is crucial for refinancing to work well. You should ideally have a portfolio of properties ready to go when the money comes through, so that you can get it reinvested into property as quickly as possible. It is also a very good idea to advertise for tenants in advance, so that you can start seeing a return on your refinancing immediately. You do not want to be making the increased payments on your new financing package any longer than you need to without income coming in to cover it, and ideally not even once. If you can quickly get the rent in to cover it, refinancing could prove to be a very profitable way to go.