If you’re at the clothes store, and you buy a shirt off the clearance rack for 90% off, is it a good deal? What if it doesn’t fit you or it’s just plain ugly !? I’ve been getting a lot of calls on a really low priced bank property from would be Investors looking for an investment property. So, is cheaper really better? Not if cheaper doesn’t “fit”your investment goals!
I recommend thinking about what kind of property you want, then compare prospective properties to your “criteria” to see if they fit. This will help you objectively decide which properties are good for you and which ones aren’t and will set you apart from the investors wouldn’t know a good deal if it hit them in the face.
For example, would you prefer…..
1. Single home vs Townhome vs Condo vs multifamily?
This will affect the kinds of tenants you attract.
2. Monthly cash flow from rents or long term appreciation of property value?
They’re pretty much mutually exclusive, pick which one you want.
3. Location, location location???
of course this is a critical part of your investment plan.
4. Property Manager or No?
A location close to will be easier to manage yourself if you’re not going to hire a property manager.
5. Cash purchase or financing?
Cash allows you buy homes that are in poor condition so opens more opportunities. Financing makes your offer less competitive and there are many challenges with investor financing…. Be thorough in your pre-qualifying for an investor mortgage.
6. Price range?
How much cash do you actually have or how much mortgage can you actually get?
7. What’s the minimum rate of return that you require?
Cash on Cash is the first and easiest calculation…. Cash in divided by Cash out. $x rent after expenses divided by a $x purchase would be x% return.
Well, that’s it for now…. 2009 is a great time to buy investment property in South Jersey. Let me know when you’re ready to take the first step and together we’ll develop a basic plan to get you started.
Thanks for reading
REMAX Home Team