Seems like a lot of people are making money through becoming landlords. Thinking of taking the plunge yourself? Landlords have to put up with a lot of crap… yet I’m finding that the crap may very well be worth the effort if you’re smart and know how to work the numbers. I’ve also written several pieces about how to buy your first house and what to do when considering real estate investments that may be useful to you.

What to look for in a good deal

The best piece of real estate that you can buy follows the rule of tens:

Don’t put down more than 10% on the property

Don’t pay more than 10% interest

Buy at least 10% below the market price

1. Don’t put down more than 10% on the property
The coolest thing about being a landlord is that tenants pay off your property. The entire mortgage is tax deductible. If you don’t have a lot of cash sitting around, use leverage’let the bank’s money make you money. The less money you invest in the house, the more banks carry and tenants pay off.

2. Don’t pay more than 10% interest
Investment properties hold higher interest rates with banks because they’re a bigger risk. Investments don’t hold much sentimental value. If you’re in a pinch, banks know that you’d rather pay off something that matters to you personally’like your own home.

3. Buy at least 10% below the market price.
Rental homes don’t need to be the nicest on the block. And the misfortune of leasing your property is that it’ll probably be in worse shape than when you started. As I said in the point before, you take better care of things that you are emotionally attached to. Since tenants don’t own your property, they’re less likely to be as meticulous about the home’s care. Plus buying undervalue property means that when you sell at value, a few extra dollars will come your way.

When you’re ready to make an offer

The person with the highest offer isn’t necessarily the person who the owners want to sell to. Sellers are interested in the extras. A few of those brownie points that I have found helpful are:

Keep your offer simple

Offer a quick closing

Buy “as is”

1. Keep your offer simple
You can line up a lot of contingencies on a property purchase: home inspection, mold inspection, lead-based paint inspection, bank financing… The list goes on and on. Owners get nervous when you start checking off that list of contingencies. They just want to sell the property! Keep the number of check points smaller; it equals a quicker sale in the minds of an owner

2. Offer a quick closing
Sometimes, a closing can drag on forever. It can take months. Owners have already detached themselves from the home, and they’re ready to move on. They want the money. You know that phrase: a hen in the hand is worth two in the bush? Why’d that line come about? Because we’d rather have less now than wait for more later. People are impatient, which is great for you. Offer less, but offer it now.

3. Buy “as is”
Owners want to sell. But what if the house is filled with problems? The electrical needs some work, the carpet is stained, the windows in the back bedroom are cracked from baseball games. Say you’ll take the house as is! (With a lower price, of course) Be sure to have a home inspector evaluate the severity of the home’s faults if you’re not well experienced. The last thing a seller wants to think about is making all those minor repairs.