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Residential Property Investing

By Elizabeth R. Elstien

Thinking about buying a residential investment property? The advertised get-rich-quick-with-no-money-down schemes don't paint the real picture. Whether purchasing a single-family residence, a duplex or an apartment complex as an investment, there are a number of basic items to think about if you want to be a landlord.

Think Business

Owning and operating an investment property is a business. Therefore, the figures must show that the property actually makes money. After all, any business owner is in it to make money, not lose it. Can you really afford to purchase the property? Will you be able to pay the mortgage and other expenses if several units remain unrented? Consider your goal. Do you want a long-term investment or a property you can purchase, upgrade and later resell at a profit?

Have A Plan

Do you have a plan for property management? Will you be living in one of the apartments and functioning as an onsite manager? Do you know the tenant/landlord laws in California? If not, learn quickly or hire a professional property management company to operate your newly acquired business property and be prepared for the extra expense (approximately 10-12 percent of rents). Interview several property management companies before making a decision and remember that rates may be negotiable.

Set Rental Rates

With investment properties, it's important that any prospective owner understands property management and current rental rates. Remember that some cities in California, such as Palm Springs, have rent control, which strictly regulates the rental rates. It's a good idea to research rates yourself or consult with a reputable property management company in the area where your property is located to flesh out your knowledge of tenancy and rate issues specific to your investment property.

Research The Area

Research the area well for crime rates, bus routes, parks or other play areas and schools before buying. Is the investment property a place that potential tenants want to live in? Certain amenities -- a dishwasher, laundry facilities or new appliances -- are very desirable features that help draw tenants to a property.

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About The Author

Elizabeth R. Elstien has worked in real estate for over 15 years as a real estate...

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