• 10/30/2008 - New Article
• 04/15/2007 - KITCHEN MAKEOVERS THAT “SIZZLE”
• 03/27/2007 - WHY YOU SHOULD DO A HOME INSPECTION!
• 03/27/2007 - FOR SALE BY OWNER TIP – Just Don’t Do It!!
• 02/11/2007 - CHOOSING YOUR REAL ESTATE AGENT
• 01/11/2007 - SIGN OF THE TIMES! - WHAT'S HAPPENING OUT THERE??
• 12/11/2006 - THE BATH - Enjoy It Before You Sell It!!
• 11/11/2006 - FIXING UP YOUR HOME FOR A QUICK SALE
• 10/11/2006 - MORE LISTINGS, FEWER BUYERS - CHANGING EXPECTATIONS
• 09/16/2006 - SHOULD YOU OWN YOUR HOME?
• 08/11/2006 - HOME INSPECTIONS
• 07/11/2006 - THE SECOND HOME MARKET
• 06/11/2006 - SELLERS NEED TO THINK LIKE BUYERS
• 05/11/2006 - REAL ESTATE IN A COOLING MARKET
• 04/11/2006 - REMODELING ON A BUDGET
• 03/11/2006 - SUCCESSFUL REAL ESTATE INVESTING
• 02/11/2006 - HOW TO BUY YOUR FIRST HOME . . . AND APPEAR EXPERIENCED!
• 01/11/2006 - SQUEEZING EVERY LAST DOLLAR FROM YOUR HOME SALE!

Record-Eagle,  March 18, 2006                 Cookie McCullough

SUCCESSFUL REAL ESTATE INVESTING

Everyone has certain goals and aspirations when it comes to investing. I have found that there are certain guidelines every aspiring real estate investor needs to know. One of the biggest problems individuals just starting out have is deciding on the type of property to look for and where the desirable areas are to invest, in contrast to the least desirable and those that fall in between.

Compare Property Values and Rents
The best measure of a property’s market value is often the sale prices of nearby properties – financial statistics only go so far. 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 usually afford to buy – so reasonably priced rent is a need.

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 will benefit from experience by specializing in one aspect of investment real estate properties.

Know the Costs Going In!
Know the financial statements inside and out. What are the operating expenses, loan payments, vacancy costs, and taxes? What does the cash flow statement look like? These are key issues that must be addressed before making a solid investment.

Consider Maintenance Costs
Ask the local utilities to verify recent utility expenses, especially if any of these costs are included in your tenant’s rent. Other considerations are road maintenance, lawn care, snow removal, etc. – these costs can all add up!

Inspect
Make sure that you always perform a thorough inspection of the property before buying it. Never, ever buy any property without examining the site. In some cases, hiring professional inspectors to examine the structural and mechanical system may be a sound investment. You should focus on plumbing, electrical, foundation, structure, roof and location. The rest will generally be cosmetic repairs that can be done quickly and inexpensively in an effort to realize the true value without going broke.

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. It may be a good idea to consult your insurance representative regarding all types of insurance.

Know Your Tenants
Regardless of what kind or real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow – whether it be pre-tax or after-tax - - requires rental income. Be sure to find quality tenants - a thorough credit and employment check is probably a good idea.

Assess the Tax Situation
Taxes are an integral part of successful real estate investing. 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.

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.

Consult Your Accountant
Taxation is a key element of successful real estate investing. Be sure to find an accountant who is well-versed with the constantly evolving tax codes.

Use Leverage
One of the most important factors in determining a solid investment is the amount of equity or leverage you are purchasing. Equity/leverage is the difference between the actual worth of the property and the balanced owed on the mortgage. (Example: Purchasing a $100,000 value property with $10,000 down - $90,000 is leverage) Leverage is also using the equity in one property to purchase another.

Benefit From Growing Equity
While investing in real estate is relatively complex, it is often worth the extra work. When compared to other investments, like bonds or CD’s, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it’s time to sell or refinance. Determining the proper amount of equity may require the assistance of a real estate professional.