The other day I had a great conversation with my mortgage broker. She detailed some of her recent investments and the continuous upgrading that she and her husband have performed. I got a great deal of information from this meeting on buying investment property.
A few years ago, when I began looking at real estate investment, I was still working under the old theory of fixed, medium to long-term mortgages with 25 year amortization. The problem was, while I continued to read recent books, I missed the information current investors had. On key piece offer is the interest-only (or close to) mortgage and 40 year amortization period.
Comparing the two, a $100,000 mortgage at 5.25% with a 25 year amortization would cost about $599 per month. The same mortgage with a 40 year amortization and interest only would cost around $437 per month. That can add a lot of needed cash flow to your property and even make it viable in the process.
The only thing to keep in mind with this method is 1) you are banking on high appreciation 2) rents must keep going up. With the current situation across the States and a general down-turn in most areas, this method has resulted in a record number of foreclosures in the past year.