Getting started with investment property?

Question

I make around 30,000 a year and I would like to know what are some of my options for getting started in investment property in the illinois area. I'm looking at getting a DUplex house and living there and renting the other half to cover the mortgage.Who are people or web site that can advise me. My credit is okay but I can be improved.

Answer 1

Great that you are planning such a wise investment path. I started exactly the same way many years ago. And I'm doing quite well now. My advise to you is go ahead and buy that duplex building. But rent both sides out instead of living in one side. Find urself a cheaper bachelor's apartment to live in. Likely you can get more rent from one of ur duplex than it cost you to rent a bachelor's. You will make more money each month because of the difference.
You may say that you only make $30,000 a yr.. but don't forget that when you go to the bank with a proposition to buy and rent the entire building out.. ur yearly income as viewed by the bank is now much more coz they will factor in ur potential income from the duplexes. This allows u a greater debt/expense ratio. and allows you to buy more.
There are other good reasons too for not being too quick to move into one side.. income tax for example, because u are not living in the building.. the entire interest on the mortgage becomes an investment expense. Also, it's likely that where you live.. there are better tax advantages to showing u are also a renter.
In time, as you buy more and more buildings.. you will be able to choose a house of ur own. But for now, make the most of "all" ur money, live below ur means.. and invest invest invest.
Important concepts to understand, balance and use to their most potential are; Ur networth, total assets, debt service ratio and income (both present and potential) debt service ratio is usually the most common limiting factor. ( and keep a watchful eye on interest rates) and know ur local realestate trends and be ur own best forcaster of future trends. As they say, "buy low, sell high"
Coz in the end, most of ur money will be made on capital gain rather than rental income. ( rental income simlpy facilitates debt expense requirements from lenders )
Choose a good banking agent.
As a realestate investor, ur bank becomes ur greatest partner. Choose an agent that has confidence in you, is knoledgable about realestate and is not afraid to stick his/ her neck out for you.
Best of luck to you.

Answer 2

talk with a realtor/broker... aside from selling and buying property.. they have an ear in the market and will help you set realistic goals and guide you through it... i would go with a well established firm, some options include foreclosures must sells and fixer uppers.

i really do not suggest the tapes/books on getting rich.. its fine down the road for entertainment and perhaps you can pick up a jewel from such material, but you are just starting learn the basics try a realtor course ect.

money can be made but how its made is the key.. don't buy where you would not live/live-in, treat others(tenant's) with respect at all times (even when the rent is late) we all have some type of financial issues(have at-least 3months of mortgage payments on hand at all times). Keep business business never cross the line ( this i did not heed and aside from $$$$lost much time was lost also) be more than fair, be above the state requirements, give house warming gifts (gift card works well $50.00 of which you can deduct) this sets a precedent with your tenant's.. letting them know that you value them (its hard to not be right with someone that values you).

Go for it one more thing don't buy more than one at a time ( i learned that package deals is like a basement newly painted.. paint covers a lot of Ill's).

Answer 3

Get your credit score up above the 640 mark and start to save up money for a 10% down payment...make sure you have at least 3 lines of credit, 2 of them at $2500 or more established for at least 2 years. Once you have all this, find a local realtor/loan officer to help you locate a property you can afford. Currently you're looking at about $7-8 per thousand dollars borrowed as a monthly payment. which should include principal, interest, taxes and insurance. Example: $200,000 loan amount equals $1400-$1600 per month payment.

Answer 4

We went the two family contributors course. offered a 2 family contributors, lived in the smaller unit and rented the better one. After 3 yrs offered yet another 2 family contributors and we've been properly on our way. Did up grades on instruments and controlled to extend rents for this reason. offered properties in the area the place we resided so oversight grew to become into much less perplexing.

Answer 5

Talk to some friends or coworkers who have bought houses. Find out who had a Realtor that took good care of them - not just got them quickly into a house, but actually looked out for their interests. That's the best way to get a good Realtor.