Buy The Right Property

I've been reading "Creating Wealth" by Robert Allen. It is a great read for anyone in need of a real estate investment blue print. The idea is that you purchase properties and rent them to help pay your expenses, then sell the properties off over the course of the following 10-15 years, earning yourself a handsome profit and some financial freedom.

Nothing new here; no magic bean or secret formula for success. I am viewing it more as a positive affirmation of the course I have chosen in life. I too believe that real estate is a fantastic investment vehicle because it offers tax benefits that no other investments can. In fact, I agree with most everything Mr. Allen has to say and the ideas he has to share. I just differ in one area. His main thesis is that people should stick to single family homes and leave the commercial properties to others. I, on the other hand, am a huge fan of commercial properties and have a majority of my real estate holdings in them.

I always think of the game Monopoly. Remember how you buy houses and once you reach 4 houses, you get to trade up for a hotel? I try to do the same thing in real life. I first purchased a 3 bed 2 bath single family home. I improved it and rented it out for the next 3 years. I was lucky enough to be in an area that appreciated quickly and made enough profit to purchase a nine unit apartment building. I went from having $1,500 a month in total rents to over $5,000 WITH JUST ONE PURCHASE!!

All property ownership comes with maintenance. Whether you own 20 single family homes or one 20 unit apartment, you will have to pay for the upkeep of the property. After owning numerous single family homes and having to travel all over for simple things like mowing the lawn and, being from a cold weather state, shoveling snow, I have found that having one larger property to deal with is much easier. One lawn to mow, one driveway to shovel.

Many people are scared of larger properties. If you do your due diligence and inspect the property with a fine tooth comb, you will more often than not come out ahead. Be sure to inspect EACH UNIT completely. I use the following checklist.

Plumbing
Shower heads and faucets work with good water pressure
Sinks and bath/shower have no problems with drainage
Toilet has no leaks and is in good working condition

Electric
Outlets
Living Room
Bedroom
Kitchen
Bathroom
Hallways
Light Fixtures
Living Room
Bedroom
Kitchen
Bathroom
Hallways

Gas Ranges in good working condition

Common Areas of Building

Boiler
Water Heater
Electrical Outlets
Light Fixtures Inside/Out
Washing Machine/Dryer
Roof
Windows

Once you have a good understanding of the condition of the building, you will be able to make a wise decision and purchase a cash cow that will earn you income for years to come. Buy the right property, build a strong portfolio and watch your net worth increase.