Welcome to Real-Estate-and-Property
Prudential Real Estate Article
This is a selection made from among articles on Prudential Real Estate. For a permanent link to this article, or to bookmark it for future reading, click here.
How to Eliminate Risk in Real Estate Investment
from: Neda Dabestani-RybaHow to Eliminate Risk in Real Estate Investment
By Neda Dabestani-Ryba
Prudential Carruthers REALTORS
Avoid 12 Common Mistakes Made by Novice Investors and Ensure High Rates of Return!
Real estate investment has provided many investors with positive cash flow, tax benefits and satisfaction of making an impact in others lives. Like any investment however, real estate has intricate nuances and market trends that when ignored can cause an investor tremendous heart ache.
Unbelievably many first time investors are willing to part with their hard earned cash without taking the time to study their investment. They rely on traditional trends and gut feelings. Before you risk your investment take the time to learn all you can about your market. By aligning yourself with the right professional you can avoid these 12 common mistakes and youll ensure an excellent return on your investment.
1. Failure to Determine Your Time Need - Cash flow, capital appreciation, tax benefits, loss of management, equity paydown and pride of ownership are just some of the things that need to be addressed before you make that investment. A service minded real estate professional can be a tremendous asset by taking the time to evaluate your needs and making sure youve got all your bases covered.
2. Not Checking out the Seller or Sellers Agents Numbers - Claims of extremely high rates of return run rampant in real estate investment. Dont get caught up in the excitement - check everything: rents, payment history, taxes, expenses, deposits, future modifications... everything. Make sure you have the right agent...its like having a good insurance policy against overlooking all the seemingly insignificant but very important details.
3. Forgetting You Are Buying a Business - Owning investment property carries with it a great potential for creating wealth and... some potentially difficult decisions. Evictions, re-investment into the property and time management all need careful consideration. Remember this is not a hands off business.
4. Avoid Negative Cash Flow - Property that eats cash every month can drain your working capital. This can create stress, frustration and become quite painful. Predicting constant appreciation is extremely difficult if not impossible for the unseasoned investor. A strain on your cash flow may cause you to sell the investment before the benefits of ownership are ever realized.
5. Failure to do a Thorough Inspection - Look under every rock! Hire a professional inspector. Ask the tenants about pest problems, structural damage or reoccurring problems. Dont overlook anything! A value driven real estate professional will help you find the right inspector and can help you avoid costly mistakes. When investing your hard earned money be sure and use sound business judgment!
6. Failing to Have Adequate Insurance - Investment property brings liability. Tenants, cars, parking lots, cleaning facilities, property liability - the list is quite extensive. Adequate insurance coverage is an absolute must! Be sure to consult with an insurance professional and protect your hard earned assets.
7. Inspect, Approve, and Confirm All Documents - The list of documents that need to be proofed can be overwhelming to the first time investor. Building permits, zoning laws, rental and lease applications, health licenses, laundry leases, underlying loan documents, CC&Rs, by-laws, title policies, mineral leases, inspection reports, purchase contracts, insurance.. dont attempt to do it alone. The right professional can remove most of the stress and bring the transaction to a conclusion smoothly.
8. Get a Bill of Sale For All Property Involved - Many types of personal property (appliances, furniture, fixtures, etc.) can be involved in an investment sale. Be very detailed -know who owns what!
9. Charge Fair Rents - Vacancies, turnovers and lease terminators are your biggest expense. Charge fair rents, treat your tenants with respect and respond as quickly as possible to their needs. Its a lot less costly in the long run to take care of the little problems before they become big problems. Vacant property is your Achilles heel.
10. Select Qualified, Good Tenants From the Start - Take the time to check references. Previous landlords, employers, financial references, credit and judgments are all vitally important. If there are any questions do a thorough investigation. Drive by their previous residence. A little work up front can save tremendous problems later.
11. Make Sure You Get Estoppel Letters - Get letters from tenants confirming the status of tenancy. Make sure their version of the rental or lease agreement corresponds with the sellers interpretation.
12. Dont Spend Positive Cash Flow - Most of successful investors have free and clear properties. Be sure to re-invest your cash flow back into the property payment and speed up the amortization schedule. This decreases your debt load and increases your equity which builds your net worth.
Investment property can be one of the most rewarding aspects of your financial portfolio. Be certain to have all your ducks in a row before you invest. Do your homework! Consult with a professional real estate agent and protect yourself from the hidden troubles that can plague first time investors.
About the Author
Neda Dabestani-Ryba is a licensed Realtor in Maryland. She is a member of the President's Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/
Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity
Related Articles for Prudential Real Estate
 |
 |
Other Prudential Real Estate related Articles
Interview With Ron Mead The Secret Goldmine Of Probate Real Estate
Commercial Real Estate Guide Earn More With Commercial Real Estate
Beat The Crowd When Investing In Real Estate
7 Marketing Methods For Real Estate Coaches
Making Money In Real Estate
Prudential Real Estate News
Prudential Carolinas Realty adds 13 new sales associates - Carolina Newswire
WINSTON‐SALEM , N.C. – Prudential Carolinas Realty is proud to introduce 13 new sales associates to our Carolinas real estate team. In the Charlotte area, we are pleased to welcome Ron Midura. In the Triad, Mike Amazon, Meagan Bowling, Wes Bowman ...
Read more...Prudential halts deal with largest Minnesota franchise - Minneapolis-St Paul Business Journal
Prudential Real Estate Affiliates has terminated its franchise agreement with its largest Minnesota franchise, Prudential Metrowide Group. The split affects 167 real estate agents who belonged to Prudential Metrowide and now must decide whether to ...
Read more...Real estate roundup: Samuel, Son & Co. expands - Portland Business Journal
Samuel, Son & Co. will double the size of its Portland metal operations under a new lease at LogistiCourt at Portal Way in the Columbia River corridor. The Toronto-based processor and distributor of metal products signed a 58,864-square-foot lease ...
Read more...MOVERS: Real estate - Times Union Blogs
Ryan Puvogel of Altamont, right, joined the real estate firm in Saratoga Springs. June Schlichting of Ballston Spa, right, joined as an associate broker. Prudential Manor Homes Realtors John Van Buren joined the Kinderhook office of the real ...
Read more...Real estate’s top woman - Jacksonville Daily Record
Linda Sherrer didn’t become one of the more successful businesswomen in Northeast Florida by accident. And, it didn’t happen by marrying Jacksonville Port Authority Executive Director Rick Ferrin two years ago, making them arguably the most ...
Read more...