by Diana Howard

Created on: July 04, 2008   Last Updated: February 05, 2009

Investing in Real Estate is different than home ownership. It takes perserverance, investigation and careful planning. The average homeowner believes that his home is an asset, yet that is not really true. In truth, your residence is a liability. Most of us have a mortgage which we pay with your own hard earned money. In addition, there are taxes, insurance, HOA dues and sewer expenses. Homeowners are also responsible for paying for any repairs that may come up. When you invest in a property, that reality changes and so a whole new way of thinking must be employed.

When you purchase a property as an "Investment", you are purchasing for profit. When you make that purchase, the goal is to use as little of your own money as possible. You "investment" is the money that you come up with...it is not the purchase price of the property. By following a few rules and understanding your local landlord/tenant laws, you should have a good experience, positive cash flow and a profit at the end.

First and foremost is to purchase a property with "guaranteed" appreciation. There are no real quarantees, however, if you purchase at a discount, you can hedge your bet against a market drop and preserve your equity. In the current economy, such opportunities abound. In order to take advantage of the market place, you must must know is what the properties are currently selling for in that properties sub-division. Both banks and appraisers are now making a differentiation between sale prices for repos and those sold by owners who are not involved in a short sale or foreclosure. A Certified Market Analysis should be done for any property that you are considering. A Realtor will be the fastest and most efficient way, however, you can go to your County Records building and search those properties in your chosen subdivision to compare recent sales. This method however, is lacking as you will not be privy as to the conditions of the properties.

Pick a property that is selling at a discount of at least 25% to 35% off the market value. Today, you could get even deeper discounts. In a marketplace like we have today, there is the concern that values could drop further, so in addition it would be wise to see if that neighborhood has a high number of foreclosures. A foreclosure ridden neighborhood is now considered a declining market and it could keep you from getting a loan or delay appreciation.

As your search for your discounted homes, with the intention to rent them out, you should also strive

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