How to Start a Property Investment Business


Even though the housing market is down and the economic situation is bad, there are still some good opportunities available if you want to know how to start a property investment business.

Whether you would rather buy houses to improve and re-sell, or buy homes to rent, there are some important things to consider.

These two concepts could actually be combined in your property investment business, giving you the option to treat a property in the most profitable manner, which may not be obvious at first.

A good real estate agent can be a valuable asset for someone wanting to know how to start a property investment business. Visit with several realtors and let them know about your wish to purchase property as an investment. Inform them of the amount of money you are comfortable with spending and the type of properties you are interested in buying. A realtor can be very helpful; by locating the type of houses you are looking for, and advising you about the amount of rent you could receive for each property.

Unless you have saved a lot of money for this purpose, you will also need to find a bank or credit union to lend you the funds needed for the endeavor. When you are just beginning a property investment business, the financial institution may require you to have a ten or twenty percent down payment before getting a loan for the remainder of the purchase price. Inquire at a few banks and credit unions to find the ones that will give you the best interest rate and monthly payment options. If your goal is to acquire rental houses, make sure the monthly payment, plus 1/12th of the yearly property tax and cost of insurance, will be less than the monthly rent you will collect for the property. You’ll also need to have some money available for repairs that may be needed in the future.

If you decide to buy properties to flip, you will want to get a term loan, with no payment required for at least six months, allowing time to make all the necessary repairs before the loan is due. At that time, if you have not sold the property, you will need to pay the interest and re-finance the loan. After the renovations are completed, if you are not able to sell the property quickly, you could rent it with the stipulation that it may be sold in a few months. You’ll need to be careful to get good references for people who want to rent a house that you plan to sell, so that you are confident they won’t damage the property. If you are collecting rent, you could make monthly payments on the loan. If you have a simple interest loan and pay every month, you will reduce the principal with each payment, and the total interest over the life of the loan will be lower.

Learning how to start a property investment business can be rewarding if you are willing to put some time and effort into the process.

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Updated: April 5, 2019 — 1:55 pm