Tips of the purchasing investment properties


The housing market has come to a full circle: the prices have pretty much gone back down to where it was in year 2002. The American home owners are having the lowest equities since 1946.  


Mortgage rates are remaining in the historically low level. Yet, the lower rate has not spurred the home buying momentum: since banks are turning down loan applications just as fast as they receive them.  

That certainly did not help the real estate market to recover.


This has created great opportunities for investors who are purchasing

Properties with cash: in the San Francisco bay area, 33% of all purchases were done in cash base in March. Many of the investors have become landlords not by their first choice.

On the other hand, if you take the right approach, having a rental property can be very profitable: it provides you with steady incomes month after month.


Here are few tips may help when you are considering of purchasing a property.


Tip #1.  DO buy rental properties where there are jobs.

I bought a property a couple years ago when the market just crushed. The property is located in an area that was named by the Forbe magazine as the most depressed city in US in its March issue.  Why did I buy it? It was mainly cheap, and it was in relatively good condition. Being in real estate industry for as long as I have, that price was seen to be incredible low.  At time, I realized the city’s high unemployment rate, but I thought I could get away with low asking rent.  It turns out, even with the low rent, I had to evict tenants for non-paying.


Tip #2. DO buy single family homes instead of condos

Since you are an investor, you really do not have time to deal with homeowner association. Not all home owner associations are not good, they can be convenient for you as well, since you wouldn’t have to worry about taking care of lawns etc. On the other hand, If you run into an association that is not well managed, you can be in for a lot head aches which you probably should not be spending time dealing with since you never plan to live there.


 Tip #3  DO buy properties with easy access to shopping centers and highways

Unless you plan to buy something in up-scare neighborhood, you should avoid purchasing a property that is far away from grocer shipping centers or schools. Most renters would prefer to live places

which would not take them for a long rid

Tip #4  DO buy a property that does not need major repairs

Unless you are a contractor, those major repairs are not for average Joes. Yes, it is tempting since the prices on those houses would probably be significantly lower than that of others. On the other hand, you really don’t know the extent of the damages and you may end up in a big surprise and spend a lot of money to fix it. It may even be cheaper, had you just purchased a market priced property.   

Tip #5  DO buy the largest square footage within your budget

Living space is important for tenant with children. When a tenant looks for a place to rent, she/he would try to get the largest living place if paying about the similar amount of rent. Apparently, there isn’t a huge discrepancy in terms of dollar amount between 2 or 3 bed rooms, or 1300 to 1600 square feet


Tip # 6  DO hire a professional management company

Yes, you save few bucks by managing the property yourself. If you are a full time investor, and have no other jobs, this might be workable. If you are willing to learn the rules and regulations that you will need to follow, or handle calls for repairs during the odd hours, or, dealing with non-paying tenants. On the other hand, if you know you are not good in dealing with all these nitty-gritty issues, then hiring a property management company would be  a good option. Most of the property management firms charge less than 10% of the monthly gross rent.


 For more tips please send email to Andrew Liu at