As exciting as the entire prospect of constantly gambling with different types of properties sounds, most of us are not overtly keen on going on like this until the day we die. What would be ideal is if we could comfortably retire and live off the investments we've made in real estate. That would be the ultimate benefit of working hard all our lives.
If this is what you want, then you have to start planning ahead. Your retirement may be ten, fifteen or even twenty years away, but there's no harm in preparing for it. After all, you want to be able to live happily and comfortably even after you retire. No one likes being dependent, and your investments can ensure your financial freedom even after you retire from the daily rigmarole of house hunting. What you simply need to concentrate on at this very moment is building your investment portfolio.
So, how exactly should you go about building a good investment portfolio? First of all, you need to find properties worth investing in. How will you find these? The best thing to do is look up property listings and keep an eye out for properties that have been cleared or are on the verge of being cleared. You could do this daily, and find new properties listed.
Looking up the MLS database could also be very helpful. If you find this difficult, ask someone who's more experienced to help you out. Don't worry, you'll soon get the hang of it and become an expert yourself.
Find Out About Gross Income To Be Generated
Once you've narrowed down your choices and found a property that you are interested in investing in, the first thing you need to think about is the gross income that could be generated through it. Of course, your gross income is not the actual amount you will be earning from it. You need to subtract at least about 40% from the gross income to cover your tax and insurance payments, utilities, management and other varied costs.
Now you need to calculate how much of a loan this 60% income will service, based on a fully amortized 30-year loan at about 7% interest. What we mean here is that, if you take a loan to buy this house, you need to determine how much of that loan you will be able to pay back through the income that you earn. Once you've determined this, you should now divide the amount by .90 (or 90%). It is divided by .90 because you will be putting up to 10% down). This will help you determine the price at which you will sell the house.
Once you're done with this, you can make an offer on the listings. Don't put in a clause which says "due on sale". You can then make or fax your offer to the cooperative agent so that the agent can present the offer directly to the seller. If your offer is accepted, make a final decision whether you want to keep the property in you portfolio. If you do then keep the property and you will have made your first deal! It may, of course, take quite a few offers to close the deal, but don't get disheartened, and keep trying.