How to Buy Single Family Homes as an Investment

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By Wasatch
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Buy Single Family Homes as an Investment

Buying single family homes as an investment is harder than it has been with the credit crunch in real estate lending. That said the rents are staying steady while some price bargains are out there with bank owned foreclosures and short sales on the market.

Difficulty: Moderately Challenging

Instructions

Step 1

First and most important is financing. Check with a mortgage lender to see what kind of down payment will be required for a non owner occupied home. If you do not have adequate cash funds to get a loan for an income property consider looking to partner with someone who has the cash but not the time or look for seller financing possibilities.
Step 2

Once you know about the source of fund look for a good realtor. Do not just sign on with any real estate agent, seek out one who deals with investors. Buying a property for income takes a different mind set than buying a home to live in. Choose an agent who knows investments. My best results have been from real estate agents who own rental property themselves. They can often recommend contractors and property manages as well.
Step 3

Only buy property that will cash flow. Do not buy rental homes as an investor that have a negative cash flow. If you do you are a speculator not a long term investor. Look at not only the mortgage payment, but property tax, repairs needed or expected, and general maintenance and upkeep. If all expenses are not less than monthly rent it does not cash flow. Know the rental market and plan for normal vacancies over time as well.
Step 4

If it has a good monthly income that has a cushion after all expenses, and you can get the financing, then you have a good investment home.