SECURE A DOWNPAYMENT
INVESTMENT PROPERTIES GENERALLY REQUIRE A LARGER DOWNPAYMENT THAN DO OWNER-OCCUPIED PROPERTIES; THEY HAVE MORE STRINGENT APPROVAL REQUIREMENTS. THE 3% YOU MAY HAVE PUT DOWN ON THE HOME WHERE YOU CURRENTLY LIVE ISN’T GOING TO WORK FOR AN INVESTMENT PROPERTY. YOU WILL NEED AT LEAST A 20% DOWNPAYMENT, GIVEN THAT MORTGAGE INSURANCE ISN’T AVAILABLE ON RENTAL PROPERTIES. YOU MAY BE ABLE TO OBTAIN THE DOWNPAYMENT THROUGH BANK FINANCING, SUCH AS A PERSONAL LOAN.
Research, research, research! Consider the target area’s economic and demographical factors. For instance:
- Current job market
- Local economic growth
- Local housing market
Examine and analyze the following indicators:
- Areas with high occupancy rates
- Median household income higher than rent
- Desirability of school zones
- Proximity to neighborhood amenities (e.g. park, museum)
- Convenience, proximity of the public transportation system
Be on a lookout for properties that provide a reasonable, verifiable ROI, based on factors like:
- Structurally sound
- Right price
- Strong projected returns
- Highly rentable
- Minimal renovations
Unveiling the secret of calculating operating expenses, the key to unlocking the doors of profit. The arcane knowledge reveals that expenses on your new property will range from 35% to 80% of your gross operating income. For instance, if you charge a rent of $1,500, and your expenses amount to $600 per month, your operating expenses fall at 40%. For a simpler calculation, behold the 50% rule. If the monthly rent you charge is $2,000, anticipate total expenses of $1,000. With this knowledge, you can unlock the treasure trove of profits and pave your way to success.