Tag Archives for " Real Estate Tips "

Why Real Estate Investing is Better Now Rather Than Later

How to Get Started Real Estate Investing

  1. Develop a plan – How much can you invest comfortably? Are you expecting cash flow or merely looking to make your money when the property is resold? How long do you plan to own the property? What amount of your own effort can you afford to contribute? What amount of wealth do you plan to accumulate, and by when?

  2. Acquaint yourself with the local rental market – Read the local newspapers and see what types of income property have the highest demand for tenants. If there are tons of classifieds seeking apartment tenants, perhaps retail space is more in demand, and vice versa. In other words, learn what product would be best for you to invest in.

  3. Acquaint yourself with the rates of return – At the very least understand the difference between cash and cash return, return on equity, and cap rate. Whereas cash on cash might show what your cash investment might achieve in one year, and return on equity over future years, cap rate helps you choose a property at a fair market value.

  4. Invest in real estate investment software – It is never a good idea to rely on someone else’s numbers. It’s your money. Always run your own numbers on potential investment opportunities. Having the ability to create your own rental property analysis gives you more control about how the cash flow numbers are presented and a better understanding about a property’s profitability.

  5. Create a relationship with a real estate professional that knows the local real estate market and understands rental property. A qualified real estate professional acquainted with your market can be a real plus. It will not advance your investment objectives to spend time with the agent of the year unless that person knows about investment property and is adequately prepared to help you correctly procure it.

  6. Avoid buying into real estate investing “trade secrets”. Tons of real estate investing gurus out there repackage and sell the exact same material as the next guru. The sizzle in the business of real estate investing, however, is about owning a piece of ground that, if unduly researched and purchased sensibly by impartial numbers, with careful management, will likely be more valuable tomorrow than it is today.

How Much Do You Need to Get Started?

There’s no set amount to start real estate investing. You could start out very small and then as you begin to earn more, start contributing more. Start perhaps with 2% of your income and then add a percentage point more each year to your contribution.

The important thing is to start real estate investing now, while “time is on your side” and you can in fact take advantage of a favorable real estate market and compounding interest over the passage of time to achieve your retirement goal.

Article Source: EzineArticles.com
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How-To Guide – Is Real Estate Investing Right For You?

Five Ways to Know if Real Estate Investing is Right for You.

    1. Are you a good manager of your personal resources or do you have significant amounts of short term debt? If the answers are no and yes, in that order, do not invest in real estate until you address these issues. Real estate is liquid. Once purchased, the hold time on your new property may be significantly longer than you anticipate. This means that your potential exposure to unplanned expenses on your property may be longer than anticipated. Significant amounts of short term debt or the inability to plan your finances in anticipation of expenses may turn your real estate investment into a financial nightmare.

    2. Are you a team player and can you captain that team? Investing in real estate means partnering with others to ensure your success and recognizing that your partners may know more than you. You will encounter brokers, property managers, attorneys, handy men, plumbers, electricians, contractors, roofers, inspectors, mortgage brokers and appraisers. If you are a control freak, prefer to work alone or cannot be direct in your communication when working with people, real estate investing may not be right for you.

    3. Do you understand the kind of investing you will be doing? Will you be investing for cashflow or speculating for appreciation? Do you have the analytical tools necessary to help you work up a pro-forma for the property you will be buying?

    4. Do you truly understand that wealth-building in real estate occurs over many years and that you have to “survive” your first couple of properties to build wealth? Over 20 years ago I started baking bread. The guide book I bought featured a “loaf for learning”, a basic loaf that I could practice kneading, mixing and still turn out an edible product. Your first properties will be “buildings for learning”. As you move beyond the initial learning curve, you will move on to create wealth. In certain markets, real-estate can produce appreciation returns beyond expectations and create the illusion that real estate produces instant cash. In my life I have seen two such markets. Frankly I would not want my future financial well-being to rest on my ability to time markets. Sophisticated investors have as their core investments, cashflow properties, properties that perform during hot or cold markets.

    5. How do you react to unpleasant business news? Is your overall reaction anger that dissipates into a sense of helplessness or do you become a problem solver? Being able to solve problems is the key to having a successful business and investing in real-estate is a business. Real-estate is also a people business, by this I mean your tenants are people and the service personnel who will work on and market your properties are people. If the failings of others afflicts you with moral indignation and heartache, real estate investing is not for you. Tenants will fail to pay the rent and you will have to evict them, your property manager will charge you market or above market for repairs and will fail to market your properties properly in order to keep them full.
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