Real Estate Agent with Five Star Real Estate 6501309062

Investing in real estate can either produce a negative or positive result. To increase your odds of making a successful investment, you need to educate yourself and arm yourself with facts.

Currently, real estate is a hot market and now is the time to give some serious thought to making that investment. To get you started in the right direction, there are some specific guidelines to consider.

Become an Expert
The best way to become really good at something is to focus your attention on one particular aspect. For example, in real estate, there are many options for investment to include foreclosures, fixer-uppers, properties requiring low down payment, houses geared for first-time home-buyers, and specific types of property such as single-family dwellings, apartments, condominiums, etc. When starting out, choose one or possibly two specific types of properties to invest in. You will gain the most benefit from going this route.

Applicable Costs
To be a good investor, you must first understand all the costs associated. There are many different costs to consider such as loan payments, taxes, operating, and maintenance costs. In addition, you must maintain solid financial records to avoid running into problems. Your best option is to meet with a financial advisor before you get started to set up a database that tracks all the finances associated with each investment. This is a key step in being a successful investor.

Before putting money into a property, do some research on the market value of the house. This would include:
· Neighboring homes: to compare value
· Geographical area: to determine if it retains value
· Crime rate

These are just a few things to look at to ensure you are investing your money in the right house, in the right area.

Utility Costs
Be sure to make some phone calls to confirm the cost of recent utilities such as electrical, gas, water, and sewer.

If you decide to rent your house out and pay any utilities for the tenants, make sure that you also include those costs with the actual rent payment. For example, if the mortgage payment is $600 a month, and you plan on covering electrical and gas, which on average run $125 a month, you would need to ask $725 per month from the tenant.

Although the majority of people are honest, it is critical to run a background credit check on all tenants. Also, collect a security deposit upfront to cover one month’s rent. This ensures you as the owner. If the tenant leaves for any reason without paying, you are covered for one month. In addition, if the tenant has pets such as dogs that might cause damage to the interior of the home or tear up the yard, you should also consider collecting a pet deposit. This will give you money to replace damaged items.

Another extremely important step before making your investment is to have a full inspection of the house done by a qualified inspector. A house may look perfectly fine, but without having it properly inspected, you could easily miss a foundational problem, a plumbing leak, or a leak in the roof. These issues could cause your worst nightmare and cost you thousands and thousands of dollars. This minimal costing inspection could be the wisest investment you’ve ever made.

If you are considering an investment based on current tax laws, you should rethink your strategy. Tax laws are constantly changing. Basing your decision on current laws, may or may not make a property a good investment for you.

To better your chances of creating a positive cash flow from your investment, either contact a tax advisor or conduct thorough research first.

A seller’s coverage may be based on the replacement value, which is lower than the current value. In turn, you may end up paying a higher price due to rising insurance costs.

Investment is a powerful tool and could provide you with years of good income and equity. Just be sure to do your homework first and know all the options and possible risks. 

Comments (1)

Jerry Lucas
ABC Legal Docs LLC - Colorado Springs, CO
Mobile Notary Colorado Springs, CO Notary Training

Some good tips.  I have taught landlord classes for many years and always recommend owning property in an LLC to limit liability.  Personal ownership can be devastating if there is a big lawsuit and the owner is found liable.

May 01, 2015 11:51 AM