Hi,
I’m looking into buying my first investment property and I’m wondering what exactly I need to request from the broker/owner so that I can tell if the property is a good investment.
I’ve received some sort of financial statement but it’s just numbers typed onto a word document. It doesn’t really show whether the landlord is actually receiving the rent. Is there something more official I can request?
I’d appreciate any help. Thanks.
you can request 2 years tax return and I may go as far as to ask for 6 month bank statement. I don’t trust tax return all that will because anyone can do there own these days with a $20 software
The single most important thing you can do is:
READ THIS BOOK
http://www.1minutetorentalpropertyriches.com/index.html
JP
For an easy quick & dirty, just look at comparable rents in the area. Figure out what you’re paying and what your monthly cash flow will be. If it’ll be enough to make you happy, then you can get into more detailed research.
I wouldn’t rely on the sellers information. Just look at the market rents.
What TaxLienGuru said is really true. If you use the sellers information it will be spotty. Some of it will be accurate and some won’t. Don’t pay much attention to the vacancy levels because when you are about to sell the complex you slash the rent and relax background checks to fill up the complex. That means that although the complex may be full, it will be full of people with questionable backgrounds paying below market rents. These people will have to go. As you start fixing up the place you will begin attracting new tenants and you will need to be evicting a portion of the exiting tenants. If the complex is 300 units or above you should be able to rent about 10 units per week. You will evict about 2 to 3 per week, which means it will take more than the number of weeks to fill the complex based on vacant units because you have to take into account the turned units also.
You could always get it under contract and then make it contingent on seeing bank statements of the seller’s, proving that he received the rent all along.
From the first decision to invest in real estate to actually buying your first rental property, there is a lot of work to be done. This task may be daunting for the first-time investor. Owning property is a tough business and the field is peppered with land mines that can obliterate your returns. Here are the top 10 things you should consider when shopping for an income property.
Neighborhoods
Property Taxes
Schools
Crime
Jobs
Amenities
Building Permits and Future Development
Amount of Listings and Vacancies
Rents
Natural Disasters
Ask the seller for two years of tax returns to show how much money they are declaring. Then go around the area and find out how much is the rent among the houses there.
When you have that information, average that out and factor in what you will be spending. If the numbers are ok with you then go ahead and get the property.
MJ