By Greg Viti
Are you considering buying/owning an investment property or building a portfolio of multi-unit/ mixed use properties? We have all heard of people and partnerships making great appreciation and building wealth through ownership. I am sure most of you have also heard all the horror stories of litigation, bad tenants that will not pay and destroy the property. These are true stories, it does happen. However, I would not let others’ bad experiences keep you out of owning income producing properties.
Knowing the potential problems upfront and addressing them early can make a big difference in tenant relations and retention. If an owner cares and is attentive to the problems of the building/ tenant, this quality usually passes on to the tenant. How do you get your tenants to take some ownership? This is an earned trait. Once they see the owner/manager is willing to make things right a new relationship begins to be nurtured.
Yes I know it sounds expensive. Down payments on these types of properties are 20-30% adds up. Then on top of that all the deferred maintenance that needs to be addressed, can make this buying proposition out of reach. This may be true in some instances. Perhaps start with an owner occupied 3-4 unit. FHA financing has down payments as low as 3% they have programs where the buyer can get the rehab money upfront. This is a way to get into the investment property game. These loans require you live there one year. Trying to find an owner finance situation could really help. The banks often look at second mortgages given by the seller as buyer money to help with the down payment.
So, the first step is getting pre-approved for a loan. Clean up your credit! Interview some agents and find one that you feel comfortable with. This is all about teamwork! Happy property hunting! Make a commitment that this is the year for you to acquire a property and make it an appreciating asset!