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Buying Investment Property

Have You Got A Real Estate Investment Strategy?

In today's economic times, buying investment property can be a very appealing option for a savvy real estate investor.

If it's done right, investing in real estate can benefit you financially in a number of ways ... The property's value can appreciate over your initial purchase price, the investment property can generate a positive income stream in excess of your expenses, and your equity can increase as today's affordable payments are applied against your mortgage loan.

There are two primary investment strategies you can employ when you consider buying investment property. You can choose to live in a part of the property yourself, while renting out another flat or apartment in the same building. Another option would be to buy a separate unit, based solely on its investment potential. This can be a very worthwhile venture, but it has tax implications.

For Example:
In Canada, only the profit made buying or selling your principal residence is non-taxable. Secondary properties are normally subject to tax for any gain in price, although expenses to get the house ready for sale are often deductible.

In the USA, the Internal Revenue Service (IRS) provides some detailed information and offers some Real Estate Tax Tips here.

Whether it's your principal residence or not, rental income less some operating expenses is normally taxable.

The first step in your planning should be to thoroughly investigate and understand the income and taxation implications of each investment strategy. Once you've decided your investment strategy, it's time to start planning on the return you want on your investment. Your realtor can help you "crunch the numbers" by advising you how much you can afford to pay, offering mortgage financing options, counseling you on what range of payments the rental market will bear, estimating operating expenses, and much more.

Once you know what you can afford, it's time to start looking. You've heard the old saying that the three most important things when buying a home are: location, location, location... and this is even truer when buying investment property.

Not only are you looking for a home that will appreciate in value, you also want a home that will be appealing to renters for an extended period of time. That means you want a location that's handy to public transit routes, and is easily accessible to major amenities. Again, your real estate agent can help you identify neighborhoods with good investment property potential.

Make sure that your real estate professional clearly understands your intention for buying investment property is to rent out a portion of the home. Many homes for sale will advertise that they have an in-law apartment, or granny flat.

This usually means that the space functions as a separate unit, but the property is not zoned to use it as a legal income apartment. You can rely on your real estate professional to advise you on zoning, and safety requirements before you make that offer.

Buying investment property can be a breeze, but as a very successful Investor advises: "Be an expert in what you know and surround yourself with experts in what you don't know."

When buying Investment property, ... consider foreclosures!