Great Tips for Profitable Real Estate Investing

Focus on something you know best – Start in a market sector you understand. Whether focusing 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.

Always compare property values and rents – Financial statistics only go so far, so the best measure of a property’s market value is often the sale prices of nearby homes or businesses. The same holds true for an area rents. A low price can often be justified by a reasonable rent. Renters who can afford a high rent can afford to buy instead, so reasonably priced rent is a must.

Know the tax laws – Don’t base your 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.

Know where tenants come from – If the last rent increase was recent, tenants may be considering a move. If tenants have a short-term lease, they may be living there simply to attract unsuspecting buyers. It is also important to collect the tenants’ security deposits at closing.

Understand all expenditure before beginning – Know any financial statements inside and out. What are operating expenses, loan payments, vacancy costs, and taxes? What does the cash flow statement say about the property? These are important issues that must be addressed before making a decision.

Weigh the tax situation – Taxes are an integral part of successful real estate investing, and they often make the difference between a positive cash flow and a negative one. Know the tax situation, and see how it can be employed to your advantage. It may be a good idea to consult a tax advisor or accountant.

Check into insurance coverage – If a seller’s coverage is established on lower-than-current replacement value, your insurance cost may increase when you pay a higher purchase price.

Verify utility costs – Ask the local utilities to substantiate recent utility expenses, especially if any of these costs are built-in in your tenant’s rent.

Consult an accountant – Taxation is a key aspect of successful real estate investing, so be sure to find an accountant who is experienced with the constantly growing tax code.

Inspections – Make sure that a thorough inspection is performed on each property before buying. Don’t buy any property without at least investigative the site personally. If needed, hire a professional inspector to examine the structural mechanical systems.

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