This hub talks about buying investment properties and also how you can buy investment property and make some money out of it! I know some people will buy to let property investment and seriously buying investment properties is one of the best ways to make your money work harder for you. Yes I know about the housing and sub-credit crisis but this has resulted in cheap property prices. If you make use of this opportunity to buy housing when they are still cheap, when the market goes up, you will benefit from the increased worth of your property assets. Please read on to find on how to buy investment property! I am sure this article will not be a waste of time since investing in property is seriously one of the best investments to make!

If you have read the book "Why We Want You to Be Rich: Two Men - One Message" jointly written by Donald Trump and Robert Kiyosaki, you would have realised that the main message that both the authors wanted people to understand is that the best way to get rich is to buy investment properties. Like what they have mentioned, most investments like stocks and shares offer no control to its owner, you do not know when the stocks shares or companies would collapse. However, if you are really interested to know more about investing in stocks and shares, you might want to check out my beginner stock market investing hub here.

Property is a popular route to wealth for many investors over the years. Many people actually do not bother to buy investment properties due to the large amounts of money required to actually purchase one. However, when they need a place to stay, it is always cheaper to buy your own property than to rent one. This time, people are forced to take up a mortage or loan with the bank to finance the property and they have to pay back monthly installments to the bank. But little do they realise that the interest rates charged by the bank is usually lower than the capital appreciation of the property! Not to forget you only put a downpayment for the property, that means you are getting even more returns with just a small downpayment! Buying investment properties is thus a good way to get rich if you know what you are doing!

On the other hand, some people regard buying property to live or to stay in not as an investment. This is because they do not plan to sell the property but regard it as their permanent home. Therefore, some people prefer to buy poperty to let instead. This is also a good way to invest in properties as rental income can sometimes be very profitable, and can even let you accumulate enough money to allow you to buy your own property, if you havn't already bought one!

In some countries, many of people actually buy an investment property in the suburb or countryside while they rent in a more desirable area. Sometimes, they can even have a vacation in the suburbs at such properties, by treating their second homes as a resort! Then there are others who buy and diversify into non-residential property via property trusts.

I briefly mentioned some benefits of buying investment properties earlier. Do you know that property is usually less volatile than shares and it is safer to invest in properties when other assets are declining in value? If you do not wish to buy investment properties, perhaps you would be interested to know that you can purchase Real Estate Investment Trusts or REITs instead. The buying and selling of REITs are similar to investing in the stock market. A REIT is a company that derives most of its income from rental of properties. REITs can be classified as equity, mortgage or hybrid and has a Net Asset Value, and is traded in the stock market like any other stock. There are also mutual funds that deal with REITs.

Then there are also those who pool their funds together with other investors to start up managed funds with a property focus. Such listed property trusts or property syndicates provide exposure to a broader range of property. Hence people who invest in such funds would be able to invest in commercial, industrial, retail or even residential properties. It is thus very easy to buy properties for investment.

In addition, buying investment properties allows you to profit from capital growth. This mean that there has been an increase in the value of your property. When this happens, you can even increase the rental! So there are actually two ways you can make money by buying investment properties, one is to collect rental (buy to let property investment) the other is to wait for the value of your property to appreciate and then sell it off for a big fat profit!

However, I must warn you that as with any investment, there are no guarantees that you can make it big and get rich through buying an investment property. Property prices can still go down, though in the long run this is less possible. This really depends on the locations of the property. As they say when it comes to investing in property, the most important things to note is location, location, location!

Then if you are planning to rent out your property, you may have to deal with problem tenants. Sometimes they don't pay up and maybe they may not take good care of your property as well. That is why it is always important to collect that deposit at the beginning of the rental tenure as a form of insurance.

Selling your investment properties may be another problem as some investors may not know when would be the best time to sell their properties. The best decision would be to sell the property at an opportune time when the market is good. However, if you are selling your own home, you would need to buy another property to stay when the market conditions are similar. Hence you may also be buying a home at a higher than normal price. It is thus tricky when to best buy and sell a proper. Of course, some people treat their residential property and their investment property differently.

In addition, when you buy investment properties, it would be very important to note the interest rates that you have to pay for the property. The repayment period of the housing mortage loan should also be another point of consideration. Some loans may be 10 years, 20 years or even 30 years. The interest rates for the mortgage would depend on the different financial instituitions or banks offering them and the mortgage rate usually also varies yearly. One should always source for the best rates and also take into consideration how these interest rates can affect the investors' expected profits and returns. In addition, one must look at the repayment period and decide how much they would pay back into the housing loan yearly or monthly. One of the benefits for people to buy investment properties is that there is a lot of leverage in money, i.e. for a small amount of cash, a person may take up a housing mortage loan and buy a piece of property worth much more than the amount of cash that he has put down. Of course, you have to repay such loans slowly.

Even after discussing the pros and cons of buying investment properties to make money, please do understand and remember that buying investment property is not a simple thing and you must think of the many factors involved before actually buying a investment property. A property does not cost the same as a lot of stocks and shares, and you must know that such a decision should be thought through very very carefully. Besides planning such a purchase carefully and thinking through some of the things that you would need to do, sometimes you can also seek professional help such as from a real estate agent.

For those beginner property investors out there, I have come up with a small list of items that probably you would want to look through and think through carefully before making that investment property purchase. Hopefully this list would be of much use to you.

1. What type of property investment are you looking for? Like I mentioned previously, there are many types of property and thus there is a big variety of property to choose from before you make that purchase. For example, property can be in the form of undeveloped land, houses, condominiums, apartment buildings, flats, retail stores, commercial properties, industrial properties or even mobile property such as mobile homes or mobile home parks! Each type of property is unique and different and have their own benefits and disadvantages. While waiting for the value of the property to appreciate, please do rent out the property. So always look for property which has potential to collect good rent.
2. How much money should I spend buying investment properties? If you are just a beginner, obviously it is better to buy a smaller property which is easier to manage and also cost less. Slowly you can build up your property empire bit by bit. Also, take note of the criteria that you might want the property to have, like how many rooms and the floor area etc. This would greatly affect the cost of the property. And please do remember to buy within your means. If your income is considered on the low side, do not be ambitious and buy a big posh property. A general guideline that financial experts use is that the monthly mortage loan installment should not exceed 40% of your take home pay. If you have other installments to service, such as car loans etc, you should be even more prudent in your expenditure.

3. Where should the property be situated? As I mentioned above, there are 3 important things to look at when you choose a property. They are location, location, and location! Look out for an area that has a diverse economic base offering many employment opportunities. The nearer the property is to an economic zone, the higher the rent you can charge and the more people who would be interested in renting your property (do note that such property would also cost more) I perosnally prefer to look for property near schools or universities. You can rent out to the students who are usually not very bad tenants. The property should also be near good schools, shopping, and transportation. Other things that you should look out for is to get a property in a safe neighbourhood. This will attract higher rentals and you would feel safer without thinking while you are sleeping if people will vandalise your property or loot and pillage anything. Not to forget that it is more worthwhile to get a property near your residence, so that you can check on your other property easily. And check on your tenants of course hehe.

4. What kind of research should I do? After deciding the kind of property that you would be interested to buy, and also selecting a good area to buy that property, it is time to do some research on that property and the area it is in before buying that investment property. To find out more about the area, check out the local newspapers for the last few years to see what kind of things have been happening in that area. The news would also reveal if the area is safe, for example if there were any muggings or complaints by the public in general in that area. Other things you might want to look out for include changes in the laws, land use planning, zoning changes, whether there would be any new developments in that area or any other things that may change the value of property that you plan to buy. If you know people who are staying there then it is even better as you can approach them and talk to them to find out more about the area. You can also talk to other investment property owners or real estate agents to find out more about the property values and rents in that area. Look at the rental ads in the paper and if possible, you can also try talking to local landlords to see how much they are charging for rents.

5. I have singled out a property that I am interested in and in a location that I like after doing my research. Now what? Now it is time to do some in-dept analysis of this property. How much is the seller selling you for the investment property? How much will the property rent for, what some of the expenses would be etc etc. Inspect the property with great scrutiny. Conduct a thorough inspection of the property and even better hire a professional inspector. Check for all sorts of defects, especially those that require big (or small) amounts of money to fix. Look carefully at all the documents related to the property. If you are taking out a property mortgage housing loan, try to get an in-principle approval from at least one bank, as you might risk forfeiting your option money or downpayment if you are unable to get a mortgage loan approved at the end. Finally, get the accountant or your attorney to check through the terms of the contract before finally approving it. With good luck and god speed you would have just bought an investment property! 

I hope the above information is useful to you for buying investment properties. This is all I can say for now, and I hope this information serves as a good start for investment property buyers to buy their investment properties. If you want to learn more, please do look at the books that I have included under this hub. Buying investment properties is not as simple as just buying groceries at the supermarket, but with experience and luck, I am sure you will turn out to be smart at buying investment properties.