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Residential Versus Commercial Investment Property Loans

lbuen — Fri, 13 Jan 2012 21:14:12 +0000

Understanding Commercial Investment Property Loans to Get Approved

You may be one of the many investors who are attracted to commercial investment properties because of their monthly earning potential, not to mention the serious prospect of capital gains over the long haul. If you are thinking about venturing into this kind of real estate investment, you would definitely need a commercial mortgage. Before taking any form of funding though, you have to have a good grasp of what it is to better your chances of getting approved. You must realize that it is not enough that you are a strong borrower. What better way to understand commercial investment property loans than to compare them versus the more common residential property loans?

The Differences Between Residential and Commercial Investment Property Loans

Whose Money Are You Borrowing?

Commercial investment property lenders lend their own money, whereas residential lenders or some residential financial institution do not really lend their own money. They initially fund the loan, then sell the loan to Freddie Mac and Fannie Mae, hence, getting back their money relatively sooner than when they finance commercial investment property loans, although the residential lender will continue to have the servicing rights. Subsequently, Freddie Mac and Fannie Mae will package all these loans and hand them over through to mortgage backed securities and similar investors. This is one vital difference between the two kinds of mortgages that you must understand.

Where Do Your Payments Go?

Owing to the foremost difference we mentioned, you now can follow that when you pay for your commercial investment property loan, there are no big second-layer lenders, like Fannie Mae and Freddie Mac, expecting to reimburse the primary lender. Your payment would most likely be used by your lender to lend the money to other companies looking to invest in commercial properties. With a residential loan, Freddie and Fannie will hang around.

What If You Default?

A number of commercial investment property loans are nonrecourse. This means that if you default on payment, your lender can take hold of the collateral. This is because without the titan lenders that residential mortgages have, commercial lenders are left in the lurch with a sorely performing asset, and their only recourse is to sell the property. For nonrecourse loans, however, they do not have further claim against you for any balance. For this reason, the qualifying criteria are often stiffer as lenders are more selective in approving commercial investment property loans as they would be with residential mortgages.

So now that you already have a good grasp of the behind-the-scenes of the lending world, you now have an idea on how to get to work on your loan application. But remember, no two properties are exactly the same, so even if they are both commercial properties, do not expect them to get the same terms in their commercial investment property loans. The particular property you choose to invest in is a big factor as to whether or not your loan application gets the thumbs up or the thumbs down, so choose astutely.

When Is It Time to Start Looking for Investment Property Refinance Loans

lbuen — Fri, 30 Dec 2011 05:50:58 +0000

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Lenders make it a point to offer spanking investment property loans like shiny brand new cars. They polish rates and loan terms just like car dealers rub down car hoods to make their offerings attractive to would-be buyers. The time you obtained your investment property mortgage, market conditions may have worked to your advantage with the terms that you got. However, as time went by and the landscape of the real estate market shifted, the loan terms may no longer be working in your favor. Let us take a peek at the signs that it may be time to take action and begin keeping your eyes peeled for investment property refinance loans.

1. Start looking for investment property refinance loans when rates are going down

You may have been lured to purchase your investment property due to its very attractive rate. However, as market conditions shifted, the low initial rate that you were once enjoying may have become a burden to you. Investors with adjustable rate loans may be lugging higher interest rates as general interest rates rise. Good thing for them though since now is the season for falling interest rates. But if you have fixed interest rate loans, the drop in interest rates may be tempting for you to consider other investment property refinance loans with lower rates. By refinancing, you can find ways to leverage the equity in your investment property, reduce monthly payments and boost cash flow.

2. Start looking for investment property refinance loans when you need to boost cash flow

Savvy investors know that cash flow is the lifeblood of their rental property business. A re-fi can inject more cash flow into your business provided that you have accumulated substantial equity (between 20 to 50 percent) in the property. You can convert this equity into cash through a cash-out refinance loan or boost cash flow by opting for an investment property refinance loan with a more affordable rate to reduce your monthly mortgage payment.

3. Start looking for investment property refinance loans when you want to purchase another investment property

The low interest rates may also be luring investors to purchase additional rental properties. You can make use of the equity you have built on your present property to buy another investment property through a cash-out re-fi.

4. Start looking for investment property refinance loans when you need to renovate your rental property

When your rental property needs a facelift, you can tap the equity you have built up to finance the renovations. Remodelling the bathrooms, replacing the roofs, upgrading the doors, floors, kitchen appliances, repainting or re-siding the building or house, can spruce up not just your building apartment, but your finances, as well, because it enhances cash flow. Rehabilitating your property will add to its market value. This gives you the prerogative to increase monthly rental, hence, also boosting cash flow.

5. Start looking for investment property refinance loans when you need funds for other important expenses

Should you need extra funds to finance certain expenses, such as the college tuition of your kids, investing in stocks and other markets, or consolidating debt, you can take out cash by refinancing your mortgage. Just make sure though that you use the cash you get for important expenses only since you are putting your investment property on the line. Would you risk losing your rental property just to buy a new boat for recreation? Don’t do this unless you can really afford the expense.

Home Equity Loan on Investment Property – Is This the Right Loan for You?

Jong — Tue, 27 Dec 2011 11:50:11 +0000

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Equity loan on investment property is one of the possible options for you to get the needed cash for the down-payment of your dream house or another rental property. There are many other types of loans out there, and this seems to be one of the promising options especially if you have an existing investment property that you can use as collateral.

Before jumping on board to this kind of loan, it is best to know what home equity loan on investment property really is, and determine its suitability in your case. This is by no means suitable for all circumstances. There are instances where this type of loan is not recommended. It is, likewise, important to know its pros and cons in order to better understand how this loan can help you.

What is an Equity Loan on Investment Property?

By definition, home equity loan on investment property is a type of loan made to partially or totally finance the required equity for a home loan. This loan is, obviously, secured by an investment property like a condo for rent, or any other property acquired and already owned for the sole purpose of making profit out of it.

Can you easily get approval for an equity loan on investment property? Well, that depends on several factors that include the type of investment property that you have, and your current credit score. If your investment property has a high market value and earning generous income per month, then banks and lenders will quickly give you a thumbs up for this type of loan.

However, it depends on the current financial market condition. In times of financial crisis and a falling real estate market where property values are tremendously going down to unimaginable low levels, this loan can hardly get approved since banks and lending firms will have a hard time disposing the property in the event of loan default. But this is not a problem under a bull market with rising real estate values.

Your credit score is another important factor. A good financial standing tells lenders that you are credit worthy. Banks will give you any secured loan for as long as you have a good reputation for paying your financial obligations on time.

Either way, equity loan on investment property is one of the best options for you to get your desired home loan that requires outright equity payment.

Equity Loan on Investment Property: Pros and Cons

While an equity loan on investment property can give you quick access to cash to finance your purchase of a home or investment property, it is important to keep in mind that getting this kind of loan only adds up to your total financial obligations to various lenders. Failure to keep track of all your debts may cause loan default, thereby putting your investment property at risk of being foreclosed.

Equity loan on investment property generally has significantly lower interest rates compared to the credit card rates and the standard rates of home equity loan on credit (HELOC). But being a second-mortgage loan, the rate is still relatively higher compared to a first-mortgage loan with longer terms. If you are using an equity loan on investment property to purchase another investment property, make sure that the return on investment of the latter is higher than the interest rate of the former.

Equity Loan on Investment Property: Is this Type of Loan for You?

So, what’s the bottom line? You may have come to a point wherein you want to acquire a property for your personal use or as another rental property through a home loan and the required equity is just way beyond your present cash level; an equity loan on investment property can provide a good solution to make both ends meet. However, you should also be mindful of your present financial capacity. Having two different loans at the same time can be quite heavy.

Unless you are good in financial management and you have a strong and stable source of income, an equity loan on investment property might be just what you need to get your dream house or rental property.

Investment Property Loans – Understanding Investment Property Mortgage Loans And The Factors That Can Affect Loan Rates

lbuen — Thu, 14 Jul 2011 12:59:28 +0000

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Rationale Behind Investment Property Loans

Personally funding your own real estate investments can bleed you dry. Most newbie real estate investors do not have the money to fully pay off an investment property, that’s why they will need to secure funding from somewhere. Even savvy real estate investors who have the wherewithal to pay investment properties in full would definitely not do so. They use investment property loans as leverage so that they do not touch their own personal funds. In investor parlance, they use OPM or Other People’s Money to make money.

Investment Property Mortgage Loans Versus Residential Mortgage Loans

If you are buying a property that you do not intend to use as a place of residence but for profit, then it is considered as an investment property. If this is your first time to obtain a mortgage loan for your rental or other investment property, do not expect lenders to look for the same things that you were asked for when applying for a mortgage loan for your personal or primary residence. How the property is to be used is crucial for lenders in deciding on collateral, down payment, and income verification requirements, and the terms and rates.

Requirements For Income Verification. If you can remember it right, you were required to verify your source of income when trying to obtain a residential mortgage loan. This is because lenders would want to be certain that the borrower can afford to consistently pay for the monthly mortgage payments. The debt to income ratio is often used to determine this.

The process of income verification to obtain a loan for a real estate investment is another story because it will not concern your income but the income that the real estate can generate. So no payslips and other personal financial documents may be required. However, lenders may also require that you show them rental receipts, net income statement and other financial documents as filed on your income tax schedules, if you already own a property used as a rental home, vacation home or for commercial use. This is to find out the proportion between income and the loan amount.

Collateral and Down Payment. The lender makes use of the down payment to establish the level of risk that he will be coming up against. For a residential loan, lenders commonly require a minimum 20 percent down payment, bringing about an 80 percent loan-to-value or LTV ratio. At this rate, the homeowner is not liable for any additional requirements, like a private mortgage insurance. This insurance is required for mortgages with LTVs that are more than 80 percent.

On the other hand, you do not have to make a down payment when obtaining an real estate investment loan as it is already secured by the property itself. With the rents and other income earned by your investment property, your lender is assured that you can service the loan.

Terms and Rates of the Loan. As an investor-borrower, you have the advantage to bargain a better loan rate and terms than if you are borrowing for a personal home. This is again because of the consistent cash flow that can be expected from the rental property. The lender would also be more willing to give a real estate investor a more favorable rate and terms to cultivate a good business relationship than to an ordinary homeowner if they spot business opportunities related to the said real estate.

Factors That Affect Investment Property Loan Rates

The mortgage rate you get for your real estate investment will depend on several factors. Some are discussed below.

Rental Property Versus Buy-Rehab-Sell. You can get a better rate with a rental property that already has a dependable tenant whose monthly rental is higher than the monthly mortgage payments, as opposed to a house that you intend to fix and resell for a profit. If you are into rehabbing handyman specials, you have to substantiate that you can afford to make the monthly payments even if the home has not been sold yet.

100% Mortgage and Down Payments. Loan terms that do not require a down payment, labeled as 100 percent mortgage, may also exact a higher interest rate than those that do.

Property Location. If your rental property is in a good neighborhood where vacancy rates are low, this reassures your lender that you can fulfill the payment schedule, hence, it is in your cards to get a lower rate.

There are more factors that can affect your loan rate. Rates also vary from one type of lender to another. Shop around to get an idea of the range of rates you can get and so that you can haggle. You can use a mortgage rate calculator in one of the many sites in the Internet to compute for your rate.

Can You Obtain An Investment Property Loan Through FHA?

Some people prefer obtaining mortgage loan from the Federal Housing Authority because of its more lenient credit qualifying criteria and the down payment or equity requirements are less as compared to conventional loans. Moreover, borrowers with a slightly marred credit record or those who do not have credit history yet may qualify for an FHA.

Despite these advantages, however, you as an investor may not be able to secure an FHA loan to finance your real estate investment because only properties that are to be used as primary residence can qualify. But if it is a duplex or a 4-plex and you are planning to make one of the units your primary residence, then you may qualify. If, later on, you move out of the unit, the property may still be considered as an FHA property and may qualify for streamline refinance or loan modification.

Investment property loans are essential to any real estate investor as it can be used as a leverage to make profit using other people’s money, of course, at a cost. Besides other factors, the earning potential of the real estate holds sway in determining the loan rates.

Investment Property Financing – Finance Investment Properties With 100% Financing

Real Estate Investors’ Big Secret – Investment Property Financing

With the down market, people keep saying that now is a good time to invest in real estate. However, newbie real estate investors could only scratch their heads as they do not have the money to buy their first property. Sure, the prices of real estate may have dropped insanely low but still the cash on hand just isn’t enough. Who says you have to take your payment from your own pocket? One of the biggest secrets how savvy real estate investors make money is by using other people’s money, through investment property financing.

5 Ways To Finance Investment Property

There are several ways you can obtain funding for your real estate deal provided you have a bang-up credit rating. Even if you don’t, there are still other creative ways to financially prop your real estate deals up. The following are some ways that may help you source your funding:

Traditional Route. Borrowing from banks, credit unions and other lending companies has been the customary way for people to obtain funding for their property. However, after the mess with the sub-prime housing, these lenders have toughened up their criteria for lending, such as a credit score of 740 or better. They also require tons of paper work to show a good ratio between income and debts. And if you do qualify, chances are, you will be asked for at least 10 percent down payment, although you may find some plans that may ask for less.

Subject-To Existing Financing. This method of financing, which savvy investors nickname “subject-to”, involves a buyer who is willing to acquire the home provided that the current loan is maintained and remains in the seller’s name, but the buyer makes the payments. The title will be transferred though. This is a great way to fund a deal, especially if the property is on the verge of foreclosure, because you do not have to make a down payment and it can be the quickest you can get. But it could also be the shortest since the seller will not feel at ease while the mortgage is still under his name for a prolonged period. So you have to set a plan to refinance in six months. Although quite risky for the seller, hard-pressed homeowners would agree to this in order to get rid of the house quick. When using this technique to fund your real estate deal, ensure that you fulfill your obligation to the deal and pay on time even if the mortgage is still under the seller’s name.

Seller Carry Back. If you chance upon a seller whose ownership of a property is free and clear of any encumbrance and agrees to receive a monthly payment for it, then you can use this form of owner financing. Typically, however, the seller will set a deadline for when the note must be fully paid, usually from one to five years. Just keep in mind that you have to refinance at some future time, which is just great since it is easier to get a refinance loan than a purchase loan.

The above examples are just some ways of obtaining financing for your real estate investment. As you get yourself deeper into the business, you will discover a lot more ways to fund a real estate deal, or you can even come up with one yourself.

Quick Tips On Financing Investment Properties

If you are considering obtaining financing for an investment property: (1) prepare a substantial down payment of at least 20 percent to secure traditional financing; (2) strive for a credit rating of at least 740 so that you can negotiate better terms and rates and avoid additional costs; (3) avoid large banks and opt for local ones or mortgage brokers, especially if you don’t have substantial amount for down payment, to avail of the latter’s flexibility.

No Cash For a Down Payment? Consider 100% Financing on Investment Properties

Another option you have in funding your real estate deal is by obtaining 100% financing for your investment property, meaning you do not have to make a down payment although you may have to pay for a higher interest rate. The typical financing would require you to pay 20% as down payment to get a loan-to-value ratio of 80 percent. Beyond this rate, you would be required to purchase a Private Mortgage Insurance (PMI) to secure the loan.

Some lenders would be willing to provide 100% financing especially for investment properties that make sense since the property in question can be used to secure the mortgage. The usual structure of this type of loan is “80/20 piggyback,” which involves borrowing for the first and second mortgage from one lender or different lenders. Sticking to one lender though helps to avoid future confusion and complications. However, if you cannot find one sole lender for the two loans, consider seeking financing from other sources, such as another bank, through seller financing, from private money lenders with self-directed IRA’s, a lease option, among others.

Despite the tightened criteria to qualify for a loan, it is still possible to obtain 100 % investment property financing if your real estate investment makes sense, and if you have a good credit rating and some creativity.

Investment Property Mortgage – Ways To Get The Best Loan Rates For Your Investment Properties Including The Use Of A Calculator

Savvy Investors Leverage on Investment Property Mortgages

Investment property mortgage is the lifeblood of any real estate business. Most investors cannot, or would not, use personal funds to purchase investment real estate. They make use of other people’s money to make money. Of course, you cannot do this if the interest rate you get is higher than your rate of return. So here are a few tips on how to obtain better rates and terms.

Sort Out Your Income and Debt Before Applying for an Investment Property Mortgage

Your income and debt could either decrease or increase your loan rates, whether applying for a personal or rental property. If debt servicing eats up more than 36 percent of your income, chances are, you will merit a higher financing rate. To obtain a significantly lower loan rate, fix your finances first in such a way that debt servicing will constitute only 28 percent of your income.

Raise That Score To Get Better Investment Property Mortgage Rates and Terms

Another factor of mortgage rate is your credit rating. Evidently, a stellar credit score will more likely merit a lower rate. A score of 620 may add as much as three percent to your rate as compared to having a score of 760 to 850. So before applying for financing, check you score first and take pains to improve it if it is still below par.

Save Up For Down Payment For Your Investment Property Mortgage Loans

The higher down payment you can put up, the lower the rate you can get. That is why, it is crucial to save up some money for this payment. Try to have at least 20 percent for down payment to get better rates. Choose your lender well as some may ask for a heftier down payment for investment properties. In UK, rates for real estate investment also used to be higher than those for residential properties.

If you cannot raise money for down payment, you can opt to get a second loan to take care of this. Some investors advice that you obtain the 2nd loan from the same lender to avoid confusion and complications in the future.

Refinance Mortgages for Investment Properties

If you already own a property that has substantial equity, but you feel burdened by the high mortgage rate or you need to improve your cash flow, consider refinancing your loan. A cash-out refinance is one way to convert equity into cash. You can also refinance to a lower rate or longer term so that you can better afford your monthly mortgage payments and further improve cash flow.

Try An Investment Property Mortgage Calculator

Before jumping onto the first mortgage you get, shop around first to get an idea of the range of rates you can obtain. Many websites provide investment property mortgage calculators to make things easy in determining how much equity you need to have, and also get suggestions on the most appropriate loan for you.

Every shrewd investor knows that a better investment property mortgage rate has a tremendous impact on cash flow and the profitability of the investment; hence, knowing the factors that affect rates and how to work on them to your advantage is crucial.

Refinance Investment Property – 4 Other Reasons For Refinancing Loans For Investment Properties Besides Lower Mortgage Rates And To Cash Investment Out

Refinance Investment Property To Adjust Terms According To Your Current Needs

After some time of paying off the mortgage for an investment property, your personal earnings and investment needs may have altered. Hence, you may find to need to refinance investment property so that you can either change the terms or loan period or even the interest rate. Should you now be able to afford a higher monthly mortgage payment than before, making your loan duration shorter allows you to pay less interest and take ownership of your investment property sooner. Should you find yourself in the opposite side of the financial spectrum where you need more affordable monthly loan payments, the you can also refinance to extend the loan period so that you minimize the risk of missing out on payments.

To Switch To Lower Investment Property Refinance Rates

One of the main reasons investors refinance investment property is to substitute current mortgage with a new loan that provides lower interest rates. A two to three percent reduction in interest rate can contribute to a few dollars of monthly savings, depending on your total mortgage debts. And yes, more savings mean more profit.

Besides looking for lower rates, some investors also refinance their mortgage to switch from their adjustable rate mortgage (ARM) to a loan offering fixed interest rates. This is especially sound to do when current interest rates are really low, hence, you can opt to lock in dirt-cheap interest rates. On the other hand, if you still see interest rates in the long run to plummet, you refinance to switch from a fixed mortgage loan to ARM.

Cash Out Refinance Investment Property To Boost Cash Flow

If you find your real estate business financially tight and needing more liquidity, refinancing is one way to cash your investment. You can do this if you have accumulated sufficient equity in the property. Even without the cash out scheme, you are still, in essence, boosting your cash flow when you refinance a property with a lower interest rate or extended loan duration since you will be paying less in monthly mortgage.

Refinance Investment Properties To Upgrade Properties and Increase Rents

Some investors opt for the cash out refinancing and use the cash to bring the property to code. Doing so increases the market value of the real estate, hence, enabling them to also increase rental fees. Now you have an idea of where to get funding should you decide to renovate doors, floors, kitchen appliances and cabinetry, extend the structure to increase living space, replace the roof, or whatever renovations you are considering.

Obtain Investment Property Mortgage Refinance To Acquire Another Property

Besides renovating your property, you can also use cash out refinance to invest in another property leveraging on the accumulated equity of the existing property.

Use Investment Property Refinance Loans To Use Money For Other Purposes

Actually, you can cash out refinance to fund just about anything, not just for your real estate investments. You can also use it to diversify your investments in other baskets such as the stock market and market for other commodities. You can increase your retirement savings, consolidate debt, start a new business, buy a new car, augment funding for the college tuition of your kids, and just about anything.

With lesser interest rates and monthly mortgage payments, and possibly additional cash, you can refinance investment property to boost cash flow, strengthen your investment power, increase long-term wealth, pay off debts and just about anything.

3 Sure-Fire Ways To Determine The Value Of Real Estate

lbuen — Sat, 09 Apr 2011 02:29:08 +0000

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Understand How Investment Property Values are Determined

Just because a promising property measures up to your investing goals does not mean it could not blow up and ruin your investment portfolio. Do not jump the gun by investing in a property which you may have inspected but without verifying its real market value. You must tread the volatile real estate markets in tiptoes as properties there could become financial landmines. You cannot simply buy the seller’s or the country tax rolls figures; you have to do your own assessment. How do you exactly do this? You can determine a property’s worth in three ways depending on the kind of investing you are involved in.

Computing Value of Property in 3 Ways:

Comparable Market Approach

This method is commonly used in computing for the value of single-family or multi-family properties with less than five units. You do this by finding properties have just been sold and are similar to the property you are eyeing. These must be within the area where your prospective property is located. Similar here means approximately the same floor area, lot area, number of bedrooms, features, and so on. They do not have to be exactly the same. If a comparable property has a certain feature, such as, a garage or an extra bathroom, you may adjust your computation by adding or subtracting the cost of putting up such features which me be absent from the other property. Differences in floor and lot areas may also be balanced out by dividing the selling price by the floor area (e.g. square feet) to give you the cost per square foot. You can obtain these figures with the help of an experienced appraiser. You may also do the job yourself by collecting the necessary information from your courthouse, or with the help of a real estate broker. You can also make rough calculations using online data. Keep in mind to use comparable properties that have just recently been sold since the real estate market tend to be volatile.

Replacement Cost Method

You can also establish the value of the property by estimating the cost of reproducing the same property in the same location. When computing for this cost, you have to know the costs of construction materials and supplies. If you are not so familiar with these, you may also call a local contractor and ask for a quotation if they are to build the same building in the same location. Remember to include depreciation in the computation vis a vis the condition of the property in question. Besides the building itself, you also need to work out the average price per square foot of lots in the same area and multiply it with the lot area of the property you are assessing to give you the estimated cost of the lot. Add this with the cost of the building and you got yourself an estimate of the value of the property that you would like to invest in.

Income Approach

This approach is guided by the assumption that the value of a property is determined by the net benefits that it can bring within its remaining economic years. This makes it apt for the computing the value of commercial properties or residential properties which have over five units. Just like computing for the income of any business, this method entails subtracting operating expenses from the gross income that could be generated from the property. Expenses include annual mortgage payments, repairs and maintenance costs, taxes, marketing, legal expenses, and so on. Multiply the difference by a factor of ten to give you the approximate value of the property. You can raise its value by increasing income or bringing down operating expenses or both.

Using these more reliable methods of estimation of the value real estate, you can bid a sensible and precise offer, avoid the danger of investing in an overpriced property that could blow up your portfolio, and make a killing in your investment.

Where To Buy Investment Property for Huge Profits

lbuen — Wed, 23 Mar 2011 23:26:05 +0000

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Location precedes structure or the building. That should be the emphasis to consider when deciding on where to buy investment property. A respectable real estate investor once said that if you have to choose between a property in a good location but with an inferior building and a property in a lousy location with an impressive building, pick the former. This is because location is constant while structures can be renovated, remodeled or demolished. Of course, you do not have to settle for any of these if you can find an investment property with a fabulous structure located in a fantastic area offered at a reasonable price that fits your budget. So how do you determine a great location?

Pointers On Where To Buy Investment Property

Locations With Sustained Capital Growth. Look for places that are registering capital growth. This could be a promising suburb with an exceptional attraction or located near the city. This may also be a local town with a thriving industry. Most often, these places bustle with a robust economic activity. Properties that are near schools, workplaces, malls, parks, beaches and other important establishments and attractions and are accessible to public transportation would most likely make a good investment. You can target families with kids studying or adults working in these institutions as tenants. An area with a healthy economy also means that the population there can pay for rental. Ten to 20 years down the road, properties in capital growth areas will also allow you to earn not just from monthly rental, but also from capital gains once you eventually decide to sell the property.

Properties In The Buyer’s Market. When deciding on where to buy investment property, another important consideration is the real estate market cycle. Go for areas that are in the Buyer’s Market. This phase is characterized by a decline in home values and properties remain in the market for extended periods. This is the time when you can buy cheap and wait for the next Seller’s Market, during which housing prices go up, before you sell. If you want, you may also buy investment properties during the early phase of the Seller’s Market for flipping since selling goes at a quicker rate at this point.

Properties With Good Rental History. It would be great if the property you are eyeing already has existing tenants so that you can fill in the landlord shoes and start receiving monthly rental income right away. However, for your protection, check on rental history record; how the tenants are, if there were extended periods of vacancy and reasons for such.

Properties Away From The War Zone. Avoid properties in neighborhoods that have the potential for strife, violence and have high crime rates. Although you will not live there, you may have a hard time attracting tenants or you may not be able to find an interested buyer when you decide to sell it. Also think twice about locations that are prone to calamities such as flooding and earthquake.

To help you decide on where to buy investment property, consider locations that are in the Buyer’s Market, peaceful, indicate capital growth and that have great potential for occupancy.