learning the neighborhood or neighborhoods that the potential income property is in, and understanding your finances to include vacancy rate. Then, the investor is ready to find an income property.
Know Your Finances
First, we will discuss understanding the investor’s finances. The goal of the income property is to produce income. In other words, the property must cash flow. To determine if a property cash flows, the investor must know the property taxes, the mortgage amount, maintenance cost, insurance cost, the fair market rent, and the repairs needed to make the property livable.
The property taxes, mortgage amount, insurance and fair market rent can make or break the income potential of a property. How you ask? The latter items with the exception of fair market rent must be paid by the owner whether the rent is collect from the tenant or not that is why the vacancy rate must be part of the investor’s calculations in determining the income potential of a piece of property.
Let’s look at the math.
As an investor looking at the math is just as important and in some cases more important than finding the property.
There are options that the investor must consider if he or she is financing the property. One option that an investor may choose is a hard money lender.
In order to determine if this the right choice for the investor, I found a math calculator that will help with minimizing the risk of this type of loan. Remember, the interest rate on this type of loan c