10 Important Tips to Successful Real Estate Investing

When it comes to investing, everybody has certainbe considering a move. If tenants have a short-term
goals and aspirations. However, we have found thatlease, they may be living there simply to attract
there are certain guidelines every aspiring real estateunsuspecting buyers. It is also important to collect the
investor needs to know:tenants' security deposits at closing.
1. Compare Property Values and Rents6. Assess The Tax Situation
Financial statistics only go so far; the best measure ofTaxes are an integral part of successful real estate
a property's market value is often the sale prices ofinvesting, and they often make the difference between
nearby properties. The same holds true for area rents.a positive cash flow and a negative one. Know the
A low price can often be justified by a reasonabletax situation, and see how it can be manipulated to
rent; renters who can afford a high rent can afford toyour advantage. It may be a good idea to consult a
buy instead, so reasonably priced rent is a need.tax advisor.
2. Be Careful - Tax Laws May Change7. Investigate Insurance Coverage
Don't base your tax investment on current tax laws.If seller's coverage is based on lower-than-current
The tax code is constantly changing, and a goodreplacement value, your insurance cost may increase
investment is a good investment regardless of the taxwhen you pay a higher purchase price.
code. The right property with the right financing is what8. Confirm Utility Costs
you should look for as an investor.Ask the local utilities to verify recent utility expenses,
3. Specialize In Something You Knowespecially if any of these costs are included in your
Start in a market segment you know. Whether youtenant's rent.
focus on fixer-uppers, foreclosures, starter homes,9. Consult Your Accountant
low-down payment properties, condominiums, or smallTaxation is a key element of successful real estate
apartment buildings, you'll benefit from experience byinvesting, so be sure to find an accountant who is
specializing in one aspect of investment real estatewell-versed with the constantly evolving tax code.
properties.10. Inspect!
4. Know The Costs Going In!Make sure that you always perform a thorough
Know the financial statements inside out. What areinspection of the property before buying it. Never, ever
operating expenses? What are loan payments?buy any property without at least examining the site. In
Vacancy costs? Taxes? What does the cash flowsome cases, hiring professional inspectors to examine
statement look like? These are key issues that mustthe structural mechanical system may be a sound
be addressed before making a solid investment.investment.
5. Know Where Your Tenants Are Coming From(c) Copyright 2005 Madan Ahluwalia. All rights
If the last rent increase was recent, your tenants mayreserved.