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Are ready to answer such questions: Are you ready at last to take the plunge and purchase your first investment property? Have you already saved enough money in order to invest it in real estate investment, but are not sure how to start? If your answer is “yes”, then you should read the following recommendations about what to purchase and where to begin in order to boost your investment.

As concerning most of first-time investors, mainly the choice is between a Single Family Home or a 2-4 unit property, that are usually called Duplexes, Triplexes and Fourplexes. As a matter of fact, there is a big difference between them and it is very important to completely realize them before plunking your money down. Let’s have a closer look at Single Family Residences (SFRs).

To begin with it should be said that Single Family Residences provide an investor with the greatest leverage possible that means you are available to put the least money down. You see, it is not unusual to purchase these types of deals with 10% down, meaning on a $150,000 home, in fact, you’ll only need to come up with $15,000 plus closing costs. This fact makes these types of investments very lucrative for most young investors who usually have not a lot of money to begin. Due to the reason that these properties typically don’t debt cover, which means the rent you collect every month probably won’t be enough for covering your mortgage payment, tax bill and any other expenses you have, you should be ready to feed the alligator monthly.

In most cases these properties are bought as pure speculation or appreciation plays. To put it simple, the goal is to make equity over time. For instance, if you purchased a property for $150,000 with 10% down, and were able to resell it in 3 years for $175,000, you’d earn $25,000 on your $15,000 investment, which equates to a 167% ROI over a 3 year hold! You might agree that it is rather profitable, but you should stay careful when purchasing these types of deals, due to that your target is to come as to close to break even as possible, so you don’t have to come out of pocket. The other important thing for you to keep in mind is that you won’t have any money that month to cover the mortgage or expenses in the case you’re tenant moves out for any reason. That is the reason why you need to male certain you have 3 months of mortgage payments in reserve for a rainy day.

The last but not least point for you to keep in mind is that the more Single Family Residences you have, the more tenants and properties you have to manage. As a matter of fact, it’s easier to have a 10-unit apartment building than 10 SFR’s since you only have 1 roof and 1 lawn to mow, versus 10 roofs and 10 lawns.

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