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Ten
Important Tips to Successful Real Estate Investing
By Neda
Dabestani-Ryba
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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. |
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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.
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.
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Neda Dabestani-Ryba
is a licensed Realtor in Maryland. She is a member of the President's Circle
of Top Real Estate Professionals.
She can be reached at (800) 536-3806
or visit her website for more information: neda.dabestani.pcragent.com |
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| Prudential
Carruthers REALTORS is an independently owned and operated member of Prudential
Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing
Opportunity |
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