Be a Real Estate Investor
10 Important Tips
Eeverybody has certain goals and
aspirations when it comes to investing. We have found that there are certain guidelines
every aspiring real estate investor needs to know:
1. Compare Property Values and Rents
Financial statistics only go so far; the best
measure of a property's market value is often the sale prices of nearby
properties. The same holds true for area rents. A low price can often be
justified by a reasonable rent; renters who can afford a high rent can
afford to buy instead, so reasonably priced rent is a need.
2. Be Careful - Tax Laws May Change
Don't base your tax investment on current tax laws. The tax code is
constantly changing, and a good investment is a good investment
regardless of the tax code. The right property with the right
financing is what you should look for as an investor.
3. Specialize in Something You Know
Start in a market segment you know. Whether you focus on
fixer-uppers, foreclosures, starter homes, low-down payment
properties, condominiums, or small apartment buildings, you'll
benefit from experience by specializing in one aspect of investment
real estate properties.
4. Know the Costs Going In!
Know the financial statements inside out.
- • What are operating expenses?
- • What are the loan payments?
- • Vacancy costs? Taxes?
- • What does the cash flow statement look like?
These are key issues that must be addressed before making a solid investment.
5. Know Where Your Tenants are Coming From
If the last rent increase was recent, your tenants may be
considering a move. If tenants have a short-term lease, they may be
living there simply to attract unsuspecting buyers. It is also
important to collect the tenants' security deposits at closing.
6. Assess the Tax Situation
Taxes are an integral part of successful real estate investing, and
they often make the difference between a positive cash flow and a
negative one. Know the tax situation, and see how it can be
manipulated to your advantage. It may be a good idea to consult a
7. Investigate Insurance Coverage
If seller's coverage is based on lower-than-current replacement
value, your insurance cost may increase when you pay a higher
8. Confirm Utility Costs
Ask the local utilities to verify recent utility expenses,
especially if any of these costs are included in your tenant's rent.
9. Consult Your Accountant
Taxation is a key element of successful real estate investing, so be
sure to find an accountant who is well-versed with the constantly
evolving tax code.
Make sure that you always perform a thorough inspection of the
property before buying it. Never, ever buy any property without at
least examining the site. In some cases, hiring professional
inspectors to examine the structural mechanical system may be a