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Buying investment properties might not be foolproof, but for the knowledgeable real estate investor it is an excellent way to build long-term wealth, even in a soft economy . Careful real estate investments will still return sizeable gains, and as a bonus, provide the real estate investor with a welcome tax advantage, as well . The key is choosing the appropriate property and buying it at the best possible cost . Knowing how the house will be used is the first decision . Don’t make a purchase before you have decided what you will do with it. If your strategy is fix and flip, look for a home that is structurally sound and only requirea some minor fixes to improve it. Paint, new plumbing fixtures, better lighting and cabinet facings and fresh hardware are relatively inexpensive upgrades that will vastly enhance the appearance of the house . If more major repairs, such as electrical, plumbing, or structural work are required , the expense will be much greater and the property might not be a good choice for the investor. Buying investment properties for rentals? If you plan to get a healthy monthly rent to pay for expenses, including your mortgage, the home must be in a neighborhood that can support the higher rent. Know about the neighborhood before you proceed . What are the views like? Is it a safe, crime-free area ? Is it near to shopping areas ? These things will help determine the amount of rent you can ask for . If your preferred strategy is purchase and hold, maybe you should think about the foreclosure or pre foreclosure market. There are many dramatically discounted homes available, and the profit potential is above average when you can buy at a significant percentage below market value. The real estate investor who has a plan and can remain within budget has a great advantage in this buyer’s market. It is important to have a strategy before you make your offer , and to carefully work through all the steps.
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