Revealed! Best tips for investing in real estate

Assistance is absolutely needed to enter in to real estate business as it is as complicated as brain surgery with various options and factors. There is always the fear of going wrong. It is really strange and astonishing to see people investing in real estate after only a crash course or allowing themselves to be guided by their sheer instinct while brain surgeons undergo years of training, internship and residency.

The comparison between brain surgery and real estate is in appropriate because no one dies by making a wrong move with investment. Any way as millions and billions of dollars are involved in real estate is of paramount importance to be as careful with it as the surgical scalpel.

Here are a few tips and bits of advice for prospective real estate investors from experienced investors and advisors.

Get started with residential property

Residential property is easier to understand, purchase and manage than any other type of property. You have the experience already and you are the owner and the boss. Start close to home so that you can be at the top.

If you have a trusted tenant in mind, that will help you in rent. Damage to property can be minimized and noise complaints will come down if you are familiar with the person renting the home.

Forget not to get every thing in writing, whether it is your best friend or family member. It is a must if the home is rented out to some one else. A friend can be too easy on late payment of rent or take advantage of friendship or intimacy. Ensure that every thing is properly understood and both are clear about mutual expectations.

Property will always go up in value

Those familiar with mortgage industry realize that this is a myth. There is a glut and overstock of residential homes and commercial properties in the US resulting in the steady decline of prices over the past few years.

America has companions in this –In Japan prices have fallen by 75% over the last decade about the same amount that Nasdaq stocks have fallen since 2000.

In the US population shift, when people left their homes in search of jobs else where, is the chief and major contributing factor for falling home prices. This is virtually a happening in almost every country at present in the world. Emigrants are increasing every year and the population is very much great than what it was five or the years ago.

Maintain a positive cash flow

To balance any fall in value maintain always a good cash flow of your property. Ensure that your property assures a good cash flow. Consider how the surrounding industry fares while thinking of residential property in Detroit as its major automotive industry is constantly cutting jobs. For commercial property also look at the surrounding industry and know if it is shifting to other area or whether developments there will compete with yours.

If you are investing inland, examine if it requires major grading before development can take place. If it is commercial property see if it requires repair to the major HVAC system and if it is up to code.

If there are tenants in a rental residential or commercial property clearly demarcate the conditions of their lease.

BY adhering to these factors you can know if there will be a consistent cash flow which can offset any decrease in the property’s value.

The Real Estate Agent is not your Friend

Never believe the agent and whatever he says or you see through him. His job is to sell the property by hook or crook. He always gives a rosy picture of the property which may not be true. For a rental property ask for his or her schedule E form for their taxes form the seller. It will show actual revenue and expenses or what has been reported to the government you can earn between what has been told and what has been reported to the IRS.

Get Real

A number of TV shows depict a number of families trying to sell their homes. The common quality of those unsuccessful people is their stubbornness to sell their property or house on their terms only. There are no upgrades or house on their terms only. There are no upgrades for their homes, and many upgraded homes of the same type are priced less but these people refuse to budge and demand their own heavy price resulting in failure and loss.

According to one real estate investor, in Shenandoah Valley, in Virginia, a developer in spring Lakes was sitting on several million dollars in unsold special homes and without getting any offers. But he refuses to lower price even by a dime.

In the case of a home owner who ran into financial trouble, he listed a home similar to the one the developer wanted to sell for $440000, for $395000. Receiving no offers he lowered the price to $369000. As there were no offers the house went back to the bank. Even in the auction by the bank none bid it even for $300000. The bank refused to let it go.

According to the investor both the parties were deluded. The bank cannot expect a higher price from a private buyer when there were no bids at $300000 plus costs, points and a 6% brokerage commission.

In case your real estate is not selling consider if the sale is important or your stubbornness and now lowering the price of the house to suit the situation.

So by properly adhering to these steps you will be able to pass through the real estate market and investment in a better way. Though you cannot do brain surgery even new, you can at least get ushered into real estate investments.


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