Before you invest

Last update: October 19, 2007 - 3:45 PM

Buy in a familiar neighborhood. Look for opportunities such as a home near where you live, or a duplex by the college you attended. Familiarity with the neighborhood and being close by are pluses.

Start small. Buy a modest single-family home and rent it or buy a duplex and live in one side. Hold onto it for at least three years before selling.

Join a real estate club and take classes. Seek out mentors and seasoned investors to help you. "The legalities can be overwhelming," said Noel Schewe of Mpls REIA.

Do your homework. Research the properties, neighborhoods and business opportunities.

Assess your skills. Are you handy? If not, you will have to hire out maintenance and repairs on rental property, costs that can affect your bottom line.

You need money to make money. Most investment property loans require at least 10 percent down. Get preapproved for financing.

Be realistic about costs, vacancies and repairs and how much the property might appreciate in value.

Foreclosed properties. Although foreclosures are at record highs, "buying a foreclosure is very complicated; you need experience and they are not a guaranteed deal," said Schewe. "There are easier ways to be successful in this market."

Keep your sense of humor. "You're investing in brick and mortar, but it's all about dealing with many people in the process," said Mpls REIA member Heather Womack.

For more information, go to www.mplsreia.com.

LYNN UNDERWOOD