10 Important 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:
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 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 tax advisor.
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 investment.