Tips For Buying Your First Investment Property-An Analysis

If that’s the case, you’ll want to read my advice on what to buy and where to start to get the most out of your money.
Most first-time investors must choose between a single family home and a 2-4 unit house, also known as duplexes, triplexes, or fourplexes. There are significant variations between the two, and you should be aware of them before putting your money down. Single Family Residences, or SFRs for short, will be the highlight of this section. Visit us for great deals in 3 Tips For Buying Your First Investment Property
SFRs offer investors the most leverage, allowing them to put down the least amount of capital. It’s not uncommon to purchase these types of properties with just 10% down, which means that on a $150,000 property, you’ll only need $15,000 plus closing costs. This makes these investments really accessible to most young investors who don’t have a lot of money to start with. However, be prepared to feed the alligator on a monthly basis, since these properties usually do not debt cover, meaning the rent you receive each month will most likely not be enough to cover the mortgage payment, tax bill, and any other expenditures you might have.
The majority of the time, these assets are bought as pure speculative or appreciation plays, with the intention of building equity over time. For example, if you purchased a property for $150,000 with 10% down and were able to resell it for $175,000 after three years, you will receive $25,000 on your $15,000 investment, resulting in a 167 percent ROI! Not poor, but when buying these types of deals, keep in mind that your target is to get as close to break even as possible so you don’t have to pay out of pocket. Know that if your roommate leaves for some reason, you won’t have enough money to cover your mortgage or bills that month, so make sure you have three months’ worth of mortgage payments set aside for a rainy day.