Ten Tips to Successful Real Estate Investing
Be a Real Estate Investor - 10 Important Secrets
When it comes to investing, everybody has certain goals and
aspirations. However, we have found that there are certain guidelines
every aspiring real estate investor needs to know:
Real estate can be a great investment when it comes to returns, upwards of 20% on your investment, but you have to be wise and plan for the unforseen.
Moving investment properties into other properties can also be done by utilizing the 1031 tax exchange program. Many investors utilize this tax savings to upgrade thir investment portfolios or to just move their investments with them; for instance from one state to another.
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.
Look in the local papers to see how many places are advertising. Are the ads promoting first month rent free or something else to lure tenants in? If there are too many rentals available, you may want to stay away from this market temporarily.
Try to also stay local if you are new to investing. The last thing you want to do is expend your income on frequent travels out of state to address issues on your property. Once you have acquired several properties, investing out of your area may be feasible with the assistance of a property manager.
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
4. Know The Costs Going In!
Know the financial statements inside out. What are operating expenses?
What are 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 purchase price.
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 sound
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