Your Objective Should Determine Your Strategy

"Of course, objectives are not the railroad timetable. They could be compared to the compass bearing by which a ship navigates. The compass bearing itself is firm, pointing in a straight line towards the desired port. But in actual navigation the ship will veer off its course for many miles to avoid a storm. She will slow down to a walk in a fog and heave altogether in a hurricane. She may even change destination in mid-ocean and set a new compass bearing toward a new port. Perhaps because war is broken out, perhaps only because her cargo has been sold in mid passage. Still, four fifths of all voyages end in the intended port at the originally scheduled time. Without a compass bearing, the ship would neither be able to find the port nor be able to estimate the time it will take to get there." ~Peter F. Drucker

All investors invest for some reason, with some objective in mind. Although objectives may change, they always exist.

As an investor it is important to stay focused, especially during times of market volatility. For best results your objective should determine your strategy.

For more information on investment objectives visit us online at Carlisle Mitchell - Real Estate Tips for Investors.

Income Property

Income property is property bought or developed to earn income using various investment strategies. 

Income property can be residential or commercial. Residential income property is commonly referred to as "non-owner occupied". A mortgage for a "non-owner occupied" property may carry a higher interest rate than an "owner occupied" mortgage as it is viewed by lenders as a higher risk.

A common practice during periods of home price appreciation is for investors to purchase residential income properties with the intent that rents will cover their monthly expenses for a period of time until the property can be sold for a large capital gain. 

As with all markets during times of fast price appreciation, and as with all market bubbles, investors that enter the market first and get out first usually do well. Investors that enter the market later, and get out last usually don't do as well.

Lease Options

Definition of 'Lease Option '
An agreement that gives a renter the choice to purchase a property during or at the end of the rental period. As long as the lease option period is in effect, the landlord/seller may not offer the property for sale to anyone else.

When the term expires, the renter must either exercise or forfeit the purchase option. A lease option gives a renter/potential buyer more flexibility than a lease-purchase agreement, which requires the renter to purchase the property at the end of the rental period.


Lease Option Explained
The property owner may charge the renter a premium for the option to purchase the property, perhaps in the form of higher (above market value) monthly rental payments. The property owner may opt to apply some of the higher rental fee toward the purchase price if the renter exercises the option.

Any premium will likely be forfeited if the option is not exercised. The term of the option may be any period on which the property owner/landlord and potential purchaser/renter agree, but is commonly one to three years. The lease-option property's purchase price may be determined either at the outset of the agreement or at its conclusion.