The first thing you have to do is to determine whether you want to buy commercial real estate or residential real estate. Assuming you're just getting into this business, I recommend you consider residential properties as they are much less complicated. The next step is to determine whether in fact you have the down payment necessary to make the purchase. Unlike a personal residence, many financial institutions and lending companies require a minimum of 25% and sometimes 30% for the down payment. One exception to this higher need for down payment is if you are going to be one of the tenants in the building where you can treat it as your personal residence. If this is the case, most financial institutions will allow you to borrow presidential rates rather than higher rates otherwise required. This is typically only good up to a four family and over that it becomes a commercial mortgage on a residential property. The next step is to determine whether in fact you want to buy single-family homes or multifamily homes and I would recommend that if you have the requisite skills or feel comfortable that you know who can be of assistance when you need maintenance completed, that you avoid the acquisition of one family homes and consider 2 to 4 family homes as it is very unlikely that all apartments would ever be vacant at any one time. You need a good lease for your tenants and if you decide to go this route, I would strongly recommend that any income property be structured in a separate LLC for the protection of you and your family. Our family has been involved in residential real estate for over 50 years and in my personal opinion, it's a fabulous way to build wealth if you can deal with tenant issues. Most tenants are quiet and appreciate what they have in your apartment but there are others that may cause you problems and you need to take this into consideration in drafting releases. I hope this helps a little and good luck.
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