How to Find a Profitable Income Property Investing In Real Estate
I want to share with you how you can buy good, profitable income properties. I will share the keys to what makes a good and profitable income property. Not only to rent out but also to sell in the future.
Buy Good Investments
Do not buy good properties. You don’t want to buy a $500,000 property when it is only renting for $2500. With this example, you would not be making passive income; you will be losing money because of the mortgage.
A good investment might even be a property that you put money into to fix and force the appreciation up.
People who buy good properties and have them as investments, I enjoy buying properties from them because they don’t do it right, and they have a headache of a time and finally just want it gone so they don’t have to deal with it anymore.
I make them a good offer that suits us both, and I take it off their hands. I make a lot of money this way.
Criteria For Good, Profitable Investment Properties
- Everyone is going to want to rent or buy it from you
- Low purchase price and low expenses
- Less amount of maintenance on good investment properties
- Families are going to want to live in these homes
- Less expensive to fix up
I know you want to get started, and I want you to as well.
So I am offering my free real estate investment course here. In the course, I will show you how to find properties, find a new area in the country to invest in, find money to invest in, make passive income, build the business first and, have a successful business.
The Number One Best Property To Invest In
I usually only tell my students about this, but I am going to share it with you. You want to buy a “cookie-cutter” type home. These are the types of homes that everybody wants to rent or wants to buy.
These are found all over the country.
This type includes three bedrooms, two bathrooms, and square footage of around 1,200-1,600 sq. ft. Also, you want to look for ones with a two-car garage.
We follow these criteria because a two-bedroom or smaller one will yield less rent and less interested people to rent it.
When students come to me and ask about a two-bedroom, I urge them not to buy it because of the reasons above.
A four or five-bedroom home would create more walls to paint, more bathrooms to fix, electrical work, and square footage of carpeting, to name a few.
There are just so many more things you would have to do to the larger homes.
Frankly, you also wouldn’t be able to get much more for rent to offset those costs.
The Main Keys For Being Profitable Properties
Main Key #1: Passive Income
Passive income is money that you are not technically working for.
You want to figure out all of your expenses first, such as taxes, insurance, mortgage payments, property management fees, repairs, and vacancy factors.
Then take your income, which you could rent the property for, and subtract the expenses.
The amount left over is your passive income. When students come to me and ask if a particular property is a good one, we will do this calculation and decide if it is or not.
I don’t want my students to be losing money or to be using their income. I want them to be making passive income.
I have 30+ rental properties that make me a minimum of $250 a month in passive income. I do not have to work. I get to make videos and teach others about real estate investing instead.
If you just have one property that you are making $250 a month on, that is $3,000 a year in passive income! If your boss comes to you and offers a $3,000 a year raise, you wouldn’t turn it down, right?
Imagine if you had ten, $2,500 a month, and $30,000 a year in passive income! Of course, having more than that, say 20 properties. That is $60,000 a year in passive income. That is life-changing, and you could quit your job.
Main Key #2: Equity Capture
This is when you buy a property below market value, and you are capturing equity. For example, there is a house that is $150,000.
As an investor, you put in an offer of $120,000, which creates $30,000 of equity captured—money in your pocket to maybe invest in another property.
As investors, we rarely pay top dollar for properties, and we try to purchase below market value. There are so many great properties out there for you to make money from if you find the right one.
Pro Tip: You Make Your Money When You Buy The Property
You realize that profit when you sell the property. If you buy it right, you will make money. If not, you will likely be losing money, and we don’t want that.
Main Key #3: Location Does Not Matter
Everyone has probably heard the phrase, “Location, Location, Location” in real estate. AS investors, we don’t necessarily worry about that because we are not buying the place for ourselves.
Of course, we like to buy in desirable areas to rent it, but otherwise, location does not matter.
This is because everybody needs a place to live, and there are people all over the country looking for places to live.
Sure, investing in San Francisco or New York sounds appealing, but you will be paying out the nose for those properties and probably not making any passive income.
With my Real Estate Wealth Builder students, I show them that they can invest all over the country. In this membership, I give my members everything on investing in a property and group-coaching.
I started investing in 2006 when I lived in California. I was buying properties in Ohio, Texas, and Arizona.
Now I have students that are branching out all over the country. You must invest in areas where people want to live and already live there because everyone needs a place to live.
Main Key #4: Increase Home Value
This can happen when you buy a property for below market value and put money into fixing it up, thus driving up the home’s value.
For example, if you purchased a house for $200,000 and did $20,000 worth of remodelings, such as carpet or paint upgrades.
This could increase the home’s value up to $50,000. So now, with the value at $250,000, you have made $30,000 with forced appreciation.
Main Key #5: Rentability
You want to make sure people want to rent this property. Some real estate investors will tell you to find a property, run the numbers and make sure you are making money first.
That is the opposite of what you should do, and we don’t do that at Master Passive Income.
Pro Tip: Build The Business First
We build the business first, so we know that someone will manage the property, that people will rent the property, and we know how much we can rent it for because the manager is already renting other properties in the area.
When you build the business first, you already know people in the area that can fix it up, manage it, and are experts in that area. Building your business first is the only way to succeed in real estate investing.
Main Key #6: Clientele
You want to figure out who is going to be your clientele. Whether the tenants are upper class, middle class, lower-middle-class, or lower class, building your business first, you will know this because the people on your team are telling you about it.
For example, the realtors or wholesalers you are working with are experts in that area. Most middle-class families don’t move that often, for example.
They are a working family with kids in school, and they don’t move a lot.
I love renting to families because they get a nice place to live, and I have a longer-term tenant. Lower-class people tend to move a little bit more often.
I have properties in lower-class areas, and it is not uncommon for the turn-over to be every year and a half or so.
Main Key #7: Crime
There is crime in every single area that you need to account for. Of course, there are areas of high crime, middle crime, and low crime. However, there are things you need to be aware of.
Even in places with relatively high crime, there is still a chance that the area is OK to buy in because people will want to rent. What you want to do is talk to your property manager. They are going to know about the crime.
They may not even be willing to manage a property in certain places. If this happens, and you bought the property without building your business first, you will be stuck with a property you may have to manage yourself.
You can find more crime information on the local police department’s website, where they post their crime statistics. I have a separate video where I teach you how to do your crime research here.
Main Key #8: Property Taxes
I am going to share with you a lesson I learned myself. I started investing in Houston, Texas, and I bought a fairly decent property. I thought I accounted for taxes, but I later received another tax bill from the city.
The bill was for $2,600, which they use to pay for their schools in the city. They have county taxes and city taxes. The people on your team will tell you if you just ask about every type of tax in their area.
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