Financial Answer Center

Owning investment property can be a terrific way to receive additional monthly income. Of course, it sounds easier than it is. It can be accompanied with a lot of headaches, but for the right person, it can be a good investment.

1. Determine if you and your pocketbook are ready for this new investment. See the section Mortgage Financing and complete the cash flow exercises.
2. Go back and learn about real estate brokers and how to select one, see the section Real Estate Brokers.
3. If you plan to borrow money to buy the property, financing the purchase is as great a consideration as finding the property itself. Decide on your down payment. See the section How Much Can You Afford? and Mortgage Financing to read all about these important issues.
4. Decide if you'll assume the responsibilities of a landlord or hire someone to take care of the headaches for you. See the section So You Want to Be a Landlord?.
5. Evaluate the type of property that will accomplish your objectives. See the section Buying Investment Property.
6. Crunch through the numbers to see how lucrative your investment will be. See the section It's Number Crunching Time.
7. Come to grips with the complicated IRS rules governing investment property. See the section Uncle Sam: Your Partner in the Deal.
8. Explore other ways you can invest in real estate, see the section Other Real Estate Investments.
9. If you decide a vacation home will better serve your needs, see the section Buying a Vacation Home.
10. You learned about mortgage options in Mortgage Financing. Now get up to speed with the types of lenders out there and the application process. Become familiar with the steps involved and the decisions you must make. See the section The Buying Transaction.
11. Decide how to own the property from a legal standpoint if you are buying with someone other than a spouse. See the section Legal Forms of Ownership to give you some background.
12. Your lender and good financial planning both require you to insure the property. Get up to speed with issues surrounding homeowner's insurance, see the section Insuring the Property.
13. Before you begin the process of closing title on the property, it pays to be familiar with the details and know what to expect. See the section The Closing.
14. Review the steps you need to take to get moving.