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10 Important Tips to Successful Real Estate Investing

When it comes to investing, everybody hastenants may be considering a move. If tenants
certain goals and aspirations. However, wehave a short-term lease, they may be living
have found that there are certain guidelinesthere simply to attract unsuspecting buyers.
every aspiring real estate investor needs toIt is also important to collect the tenants'
know:security  deposits  at  closing.
1.  Compare  Property  Values  and  Rents6.  Assess  The  Tax  Situation
Financial statistics only go so far; the bestTaxes are an integral part of successful real
measure of a property's market value is oftenestate investing, and they often make the
the sale prices of nearby properties. Thedifference between a positive cash flow and a
same holds true for area rents. A low pricenegative one. Know the tax situation, and see
can often be justified by a reasonable rent;how it can be manipulated to your advantage.
renters who can afford a high rent can affordIt may be a good idea to consult a tax
to buy instead, so reasonably priced rent isadvisor.
a  need.
7.  Investigate  Insurance  Coverage
2.  Be  Careful  -  Tax  Laws  May  Change
If seller's coverage is based on
Don't base your tax investment on current taxlower-than-current replacement value, your
laws. The tax code is constantly changing,insurance cost may increase when you pay a
and a good investment is a good investmenthigher  purchase  price.
regardless of the tax code. The right
property with the right financing is what you8.  Confirm  Utility  Costs
should  look  for  as  an  investor.
Ask the local utilities to verify recent
3.  Specialize  In  Something  You  Knowutility expenses, especially if any of these
costs  are  included  in  your tenant's rent.
Start in a market segment you know. Whether
you focus on fixer-uppers, foreclosures,9.  Consult  Your  Accountant
starter homes, low-down payment properties,
condominiums, or small apartment buildings,Taxation is a key element of successful real
you'll benefit from experience byestate investing, so be sure to find an
specializing in one aspect of investment realaccountant who is well-versed with the
estate  properties.constantly  evolving  tax  code.
4.  Know  The  Costs  Going  In!10.  Inspect!
Know the financial statements inside out.Make sure that you always perform a thorough
What are operating expenses? What are loaninspection of the property before buying it.
payments? Vacancy costs? Taxes? What does theNever, ever buy any property without at least
cash flow statement look like? These are keyexamining the site. In some cases, hiring
issues that must be addressed before making aprofessional inspectors to examine the
solid  investment.structural mechanical system may be a sound
investment.
5.  Know  Where  Your Tenants Are Coming From
(c) Copyright 2005 Madan Ahluwalia. All
If the last rent increase was recent, yourrights reserved.



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