How Do You Choose Your Investment Property?

A lot of factors go into choosing the investment property.  We are back to the previous post where we discussed the purpose of your investment, flipping or rental.  As in any real estate transaction, location is key.  So knowing what you intend to do with the property helps you to determine if the location is conducive to renting or selling.  Location will also help determine the selling price or the monthly rental that you can demand.  Have a well thought out plan.  You need to decide how much you can afford to spend.  You also need to understand that “investing” does not necessarily mean that you are buying short sales or foreclosures.  There are a lot of good buys out there by owner. You need to determine if you are going to rent/sell, how much cash you can spend and how much you want to finance.  Normally on a foreclosure, you will be required to put a 25% – 30% down payment in cash.  Then you have to figure in the cost of fixing and rehabing the house.  So your equation is going to be cash down payment + amount financed + $ amount of repairs has to at least equal the value of the house when you finish if you are going to rent.  If you are going to sell, that final amount has to be less than the sale price for you to make a profit.  So purpose, location, price, repairs and potential income are the main factors in your decision to purchase that investment property.  Let me know if I left anything out of my list.  Are there other factors that you are going to consider?


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