Things to Consider When Investing in Real Estate

Simple Truths about Real Estate Investing Tuesday, Jul 15 2008 

Uncategorized asset maintenance, consultant, investment, investment specialist, investor, melinda sorensson, real estate agent, realtor, vaneatonromero, wealth building msorensson 2:42 amEdit This

       There are several things that one has to keep in mind when investing in real estate. The very first is that real estate is largely illiquid. One can not go to the bank and just hand over the title to a piece of property and get cash for it.  In some instances a cash-flush buyer can buy it without having to go to a bank or mortgage company but the transfer of title still takes time.

      The second thing to keep in mind is that property requires maintenance. One family I know has a good piece of residential property with a tennis court, a swimming pool and a good sized landscaped yard in addition.  The cost of maintenance:$6,000.00 per month. This includes the landscaper, the pool person, the maid service and the maintenance of the court.  Granted this property is in California but it gives a pretty good picture of the process of maintaining property.

     If you own rental properties maintenance can include yard service, electricity/water/sewer/garbage collection and any variation of it, and in addition, you will need a carpenter, a plumber, a painter, a fellow who maintains the airconditioners, and someone who will see that the tenants keep to the rules.

     Before you buy property for investment, you have to ask yourself the following questions:

     1. How long do I intend to keep this purchase?

     2. Who will maintain the property?

     3. Do I have the necessary cash reserve to pay for an unexpected major expense such as a new airconditioner?

     4. How much money am I willing to put into the new property that I am buying?

     5. What is the return of my investment in comparison to a liquid asset such as a cd, a stock or very simply a savings account?

    When you have considered all of these questions, and fell you have the knack for it, you are ready to buy. Get your calculator ready.