If you are considering purchasing investment homes there are several things to keep in mind.
In many areas home prices are currently lower than they have been in many years and it may be an optimal time to buy that investment property.
The thought has always been that homes will go up in value.
In general this is true; however, if you buy a home when the market is high the long term value is not so valuable.
Be sure you watch the market trends.
It is pretty obvious that in some areas like Arizona, Florida, Nevada and California the housing market has plummeted which is great for the first time investor or investors in general.
Buying a second home or an investment home is great when prices are at a low as in time the prices will rise again.
Right now we have may bank owned homes and short sales which is a great opportunity for the investor to decide if it is right for them to buy.
This is of course a personal decision based on your current situation.
You need to look at several factors like your credit.
Lenders are being much more careful on who they give loans to and at what terms.
On investment properties and lender usually requires twenty percent down.
If a home will cost two hundred thousand dollars you will then need forty thousand dollars to put down plus any additional closing costs.
If your current situation is one that you already know it is time to start to buy one or two investment homes then the next step is to decide where you want to look.
Keep in mind that you optimally want the rent to cover the mortgage payment, insurance, interest and any additional fees such as homeowners association fees and maintenance.
You should not be coming out of pocket on expenses because then your investment home is not paying for itself.
It should pay for itself and hopefully a little left over to set aside for unknown repairs or maintenance.
You need to ask yourself if you are going to manage the property yourself or if you need to have a management company do it and factor in that fee as well.
A good rule of thumb on where the best place to buy an investment home will be to know the following is true.
A home buyer is willing to drive extra miles to own a home but a renter will not be so willing to add travel time and gas costs on a home further away from their daily routine of work and school.
If they can spend the same amount of money for a home closer to their daily routine then they will rent that home rather than one further away.
You do not want to go so far out that you will not be able to find a renter for your home.
So now you know location is a very important factor in buying a rental.
Next, what size of home is a good typical rental? At minimum a three bedroom home is suitable for the average renter unless you are talking about a college rental situation.
A single story home in the Arizona region or Nevada region would be more likely to rent a little faster as well as utilities will cost the renter less than a two story home.
Be sure the home you choose is in an area that is good for re-sale as well and a good builder.
You will one day want to sell the home in order to make a profit so look at the home as a potential home that will need to sell later down the line to a buyer and will be attractive to them.
The area is very important as a potential buyer in the years to come will likely be buying for their family so ask yourself if you would live in that neighborhood.
Investing in a rental home can be profitable but consider all factors and take your time finding the right property.