How to Buy Real Estate With an Investor's Eye By G. Brian Davis At Isnare.com Ezine Articles

Most people don't live in the same home for thirty years; they move every five to seven years, selling their old home and buying a new one. But what if you didn't sell your old house, when you moved? What if you kept it as a rental property?

Being a landlord is not for everybody, but owning a few rental properties, to bring in some extra money every month, can be an attractive proposition. To buy houses with an investor's eye, not just a homeowner's, can boost your income substantially, or simply increase your payoff when you do sell.

When considering a property as a rental investment, the price tag means more than simply what you're paying for it. More expensive properties are harder to rent, because fewer people qualify to pay the rent and because higher-income families generally prefer to buy. Lower and middle income housing tends to make far better rental investment properties, with better rent-to-ownership cost ratios.

Size is also a factor for rental properties, for some of the same reasons. The bigger the house, the higher the rent, the more likely a qualifying person would buy instead of rent. The exception to that rule is roommate housing, in college towns or areas preferred by young professionals.

Neighborhoods trending towards immigrants can be an excellent sign for neighborhood activity and increase in demand. If you're moving out of a house, and notice that an immigrant group has developed in your area, then definitely keep the property as a rental. Neighborhoods with growing immigrant populations tend to appreciate faster, due to the quick increase in demand, and making them an excellent place to have a rental property.

If you notice a trend towards gentrification in a neighborhood, where young professionals start buying up previously blue-collar housing, that's a great sign for neighborhood appreciation. If you're young yourself, it may be fun to live in one of these neighborhoods for a few years, before moving into a house more suitable for a family. These homes make great rental investments, as they typically offer high rents and (due to your early investment) low mortgage payments.

Likewise, neighborhoods with access to a great deal of goods and services tend to attract young professionals and empty-nesters. If you saved that house you lived in while you were 25, rented it out while your children grew up, and then moved back in at 50 with your mortgage entirely paid off, that's a recipe for lifelong financial success. For those middle years, while it's a rental, chances are the rent will only increase over time, while your mortgage statement remains roughly the same. Not a bad deal, to have someone else pay off your mortgage for you.

The point, ladies and gentlemen, is that your home is also an investment, whether to sell or keep as a rental. Look at each home with an investor's eye, and you can lay the groundwork for lifelong passive income.

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