Buying Rental Property is Easy
Buying rental property becomes very much easier when you use a technique, which is actually very well known in the property community, known as a 'no money down deal'
There are creative ways of obtaining your finance but providing you have solicitors who are experienced in this type of transaction, the process usually runs smoothly. Buying rental property using this technique can be achieved by using loans, credit cards, draw down facilities, gifted deposits, 100% plus mortgages and re-mortgaging etc.
There are various ways to make an instant profit, such as flipping a no money down property.
This means a buyer will sign a contract for the property and assigns the contract to another buyer for a profit. The buyer pays the money that has been received from the deal to the original seller.
Another method is called an Option.
An option to buy a property is a contract between two parties giving the purchaser the exclusive right to complete the purchase, without the obligation to buy the property, at a particular price. During the period of the option no one else can buy or sell the property including the owner.
For accepting this option the seller receives and keeps an option fee, whether the option is exercised or not. The buyer may then either exercise his or her right under the contract by completing the property purchase, sell the option to someone else to exercise (or sell) or simply let the option expire.
During the option period it is common for the seller to lease the property from the buyer.
Some lenders also offer...
loan to value and not loan to purchase price...
which makes it considerably easier buying rental property with no money down.
There are a few other creative techniques which can be used, it all depends on the current economic climate. It is important that your lender knows where funds are coming from and therefore very important you use the right solicitors who are aware of these techniques.
A huge resource of information is Deep's networking forum.
Ok, so now you have the information you need, in one place, buying rental property becomes very much easier. However, you still have to decide on your property goals?
Do you want to have a monthly income, or are you quite happy to forego a regular income while you are improving a property, so you can gain a much larger sum after selling it on?
Can you meet mortgage payments until you do sell it?
What type of properties will you buy?
For rental income you might consider smaller units eg. 2 bed apartments in an area where they are much sought after. However 3 bedroom family homes in a nice area with school, public transport and shops may give you tenants who stay in the property for longer.
Will you be doing maintenance yourself?
Although this may be cost effective in the early days, as your property portfolio increases you will find it difficult to do everything yourself. You must ask yourself if you want to be a successful property investor or a successful builder/handyman. You may be able to do both for a short spell, but sleep may become a luxury.
If you are looking for good rental properties how much do you need to meet your mortgage and other costs?
How much do you need to bring in to give yourself a healthy profit after maintenance, the odd void period and regular costs such as mortgage, gas safety checks and the odd mishap?
There is nothing more soul destroying than having to pay out for a property every month because you got the initial figures wrong.
Been there done that!
Have you got an exit strategy, in other words if you decide you don't want the property anymore will you be able to sell the property quickly?
Remember you make your money when you buy the property ie. you buy with enough discount to ensure a buffer or profit depending if you are holding the property or selling it on.
Do not rely on a rising market to realise your profit.
Another area I am frequently asked questions about is...
where can I buy cheap overseas property or which country should I be buying rental property in?
Well as I have said once before the internet is a fantastic resource however you still need to know where to look. Generally speaking when it becomes public knowledge that you should be buying rental property in a certain country you have already missed the boat.
Here are two fantastic resources I use regularly. Peter Macfarlane's site Qwealth report I have mentioned before. The other one belongs to Kathleen Peddicord. This site is called Live and Invest Overseas. These two people spend their lives travelling and uncover the most amazing opportunities world wide. Take the time to explore their sites. You won't be disappointed.
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"Ninety percent of all millionaires become so through owning real estate."
"Don't wait to buy real estate, buy real estate and wait"
"Property is the fruit of labor; property is desirable; it is a positive good in the world."