First and foremost, you’ll want to search for an enticing location. Location really is key to getting a great return on your investment, and it is also something that will attract quality renters. You’ll want to ensure the neighborhood has access to a multitude of amenities such as good schools, a thriving job market and local attractions. Take into consideration the age demographic of the area that you are investing in, too. As an investor, you’ll also want to ensure that your new acquisition will require low maintenance on your part. Properties in low-quality areas tend to require more work on your part, and will likely have a high turnover rate. Ultimately, you’ll want to be smart with your investment. You want a steady, low-risk investment.

Unless you own a multitude of single-family homes, your income will automatically be higher for multi-unit homes, as you will have multiple rent payments for the property. Even if one unit is to become vacant, you’ll continue to have a steady flow of income from the occupied unit/s to continue to cover any costs associated with maintaining the investment property. However, multi-family homes can be significantly less affordable to finance than single-family homes. This is dependent on the size of the property, of course. An investment property with 4 units or less will qualify for the same financing options as a single-unit home, versus a property with 5+ units, which requires a commercial real estate loan. With that being said, it is easier to grow your investment portfolio with strictly single-family units, as they are typically the more affordable option. Some things to take into consideration are: the amount of rental income anticipated each month, what you can afford in terms of a down payment and if you are looking to buy and hold the property or if you are looking to sell the property sooner than later.

ARV stands for After Repair Value and it is used to calculate the future value of a distressed property after a rehab. It’s important to evaluate a property’s ARV before making a purchase, as it will determine whether an investment is worthwhile. To determine an ARV you should take the cost of the property and the cost of repairs and estimate its likely selling value. An ARV should be at least 10% higher than the combined cost of the property and repairs. Take a look at our blog post, How to Estimate the Real Cost of a Property Rehab, to help determine whether to follow through on an investment opportunity.

Real estate investment offers many tax benefits. But owning rental properties is one of the strategies with the greatest potential. Come tax time, there are a number of deductions to be made. Expenses incurred while managing and maintaining your investment can all usually be deducted. This includes but is not limited to: depreciation, utilities, property taxes, repairs and travel costs associated while conducting business.

Real estate investment is a business. And like any business, things do not always stay the same. Before making any real estate investment, it’s important to consider what you will do if you no longer want or are unable to hold on to an investment. The manner in which you would divest is called an exit strategy and there are several strategies commonly used. The first option is a traditional for-sale listing where you sign a listing agreement with a real estate agent and the property is put on the market. Another strategy is seller financing. In this option, the seller takes on the role of the bank, with a buyer making monthly mortgage payments directly to the seller. This option means the seller can receive monthly income while the buyer has sole responsibility for (and ownership of) the property. A third exit strategy is a lease option, or lease purchase. A rental lease, like any other standard lease, is signed, and then an option to purchase is drawn up. The tenant is given the sole-option to purchase at a predetermined price during a predetermined time frame. Each of these exit strategies has its advantages and disadvantages, and which one you chose will be decided by the specific factors of each investment.

It is the job of a professional realtor to navigate the complex real estate business. Hiring a realtor can be a huge source of information, as well as a relief from many of the onerous tasks of selling a house. A realtor will help you determine a fair asking price, complete and file necessary documents. They will be able to list your home on multiple sites. They will create and pay for marketing and advertising to get your home in front of potential buyers. They will put on open houses and individual showings. And their experience will help them determine who is most likely to buy, who are qualified buyers and negotiate prices. They can help you navigate legal aspects, appraisal and inspections. There is a lot that goes into selling a house, and a professional realtor can be a valuable resource. If you’re selling, take a look at this article on choosing the right listing agent.

There are a few different ways to determine if a buyer is qualified to make an offer on your house. Looking at their credit history, current income or employment, whether they have been pre-qualified or pre-approved for a loan and the length of time they need before closing are all factors you should be looking at in potential buyers.