While buying a residential house is a reasonably common occurrence in the United States, buying a property for investment purposes can be a daunting venture. In addition to needing additional capital for purchasing, there are different aspects, such as the different requirements for selection and the types of loans that are available for investment properties, that you need to consider.
What is an Investment Property?
Before starting your search for an investment property, you need to understand what exactly it is. Apartment Rental home, apartment building, condominium, vacation unit, vacant lot, mobile home, store or retail lot – an investment property can take many forms. However, they all have the same principal concept: it is a property that you purchase with the intention of receiving some sort of return on that property, whether it be from an active income, such as rent, or an passive income, such as significant property appreciation for selling later.
Although many investment properties are not primary residences, the owner may occupy a portion of the property, such as when renting out a room in a house or land for agricultural use.
Why Purchase an Investment Property
Although it may seem obvious – the main reason to purchase an investment property is to gain an income, that income can take several forms:
How to Find an Investment Property
It is easy enough to find a residential property to purchase – but how do you find investment properties to consider? The same strategy for finding investment properties is the same for residential. These include:
How do You Know If Your Property is a Good Investment
If you are just starting to enter the world of investment properties, how do you know if what you are looking for is actually a good investment? Simply because the housing market is rising doesn’t mean it will do so forever. On the contrary, what goes up must come up at some point, and nothing goes up in a straight line. With that in mind, what criteria should you use? Consider the following guidelines where applicable:
Types of Loans Available for Investment Properties
Chances are you won’t have sufficient capital to purchase an investment property outright – many people don’t. Recognizing that, mortgage lenders have available different types of mortgages for investment properties. These include:
At the beginning, looking to invest in property can seem overwhelming. However, with an investment plan and a reputable mortgage lender, you can soon learn how to purchase and manage an investment property intelligently. Learning how to invest in property is one of the most worthwhile long term wealth building strategies. As with any investment, always perform due diligence, and when in doubt, ask.