This report is by Paige Tepping.
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 must.
2. Pay attention to tax laws
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 before getting started
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 a 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.
10.
Inspect
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.