5 Effective Real Estate Tips for the Beginners

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In the past few years, people stayed away from investing in real estate. According to most of them, this is one of the toughest investment options around the world. However, experts say that the above fact is nothing, but just a myth. With the following simple tips, it is easy to break the above myth, and invest in real estate in an efficient way –

#1: Business Experience Is Not Mandatory

The fact that only the seasoned businessmen can invest in real estate property in an efficient way is wrong. Though business experience acts as an added benefit, it is not mandatory at any stage. A great deal can change the thing, and can make a person confident enough to carry on the investment process. Therefore, it is the self-confidence, which matters the most, and not earlier experience in business dealings.

#2: Information in Real Estate Is Not a Necessity

Many people find it crucial having proper experience in property related issues to emerge as an expert investor. Though a person might find it astonishing, but it is not that important knowing a lot about real estate and other related issues. It is one of the most contradictory, yet resulting things in the investment process. Everyone has to start at the same point, where no one has any relevant information. It is the knowledge that person gathers over the time, which matters the most.

#3: Having A Reliable Source Is an Advantage, Not Mandatory

People, who know someone in the field of real estate investment, start with the added benefit. The process of setting a goal and meeting it, getting a team together, and relevant tips are important to a newcomer in the field. However, there are many people around the world, who prospered as a real estate investor without any source. Therefore, though a source can act as a benefit, it is not at all a part of the overall process.

#4: Big Start Is Better Than Just a Start

People often find it confusing while choosing between a big start or just a start while investing in real estate. However, in any investment process, risk is mandatory. People, who are not ready to take up risks, should stay away from the concept of lending money. Though many have a large amount of capital in hand, most of them love playing safe, and invest only a small sum. However, without any risk, there is no chance at all to gain good amount of profit.

#5: Real Estate Investment Is Not For the Riches Only

Experts found out that most people stay away from the overall process thinking that only the rich people can invest in properties. It is nothing more than a myth. Investment is a business, and there is a fair chance for everyone to earn revenue. Therefore, stop thinking and make the move to grab the revenue to move forward.

Experts designed the above tips, which broke several investment myths on its course. People, who are on the verge of investing in real estate, should keep them in mind to make each step a fruitful one.

Real Estate Tips For Landlords

Real Estate Tips

Most “guru’s” are currently spouting about how good real estate investments can be. This article won’t seek to reinforce their sales pitch, nor will it argue with it. Real Estate can be a great investment, but if you not careful it can also be a financial disaster.
You may ask who I am to speak on real estate. Whilst not a multi-millionaire selling my next great book this article can give you some practical advice of someone who rented out for over five years and explain the pitfalls and the success stories.

Important Lessons:-

1) Good Insurance:- number one is not an option – its a necessity. Ensure your asset is fully insure both normal house insurance and extras like tenant damage and loss of rental income. Given a disastrous tenant this can lessen the pain. Be WARN! Don’t under insure your house, if it burns down, particularly if there is any suspicion of arson the insurance company will do their own independent investigation and here is the real kicker – THEY WILL CHARGE YOU FOR THE PRIVILEGE – thats right, read the fine print, the insurance company before paying you out will minus their costs – i.e. $100,000 policy – $20,000 investigation means only $80,000 to you. Read the fine print, the insurance despite their ads is not your friend if a million dollar house and therefore a million dollars on the line, don’t expect the insurance company to be happy to pay out, if they can find a way to slime out of the policy they probably will. An insurance policy is a contact make sure you read it. Make sure you chose an insurance policy not just on price but also on good reputation and on company strength.
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2) A bargain isn’t always a bargain:- When purchasing a house remember to be very careful. Don’t buy on emotion. Never buy without visiting it several times on different days and times. I know of a nice suburb that has nice houses with big yards, but the smell of the local slaughter house is enough to make you want to vomit. Remember you only become aware of such things by visiting the house personally. Go at least one time without the real estate agent, speak to the neighbours and ask if they like living there. When buying a fix it upper check how easy it is to fix up. Does it contain asbestos, lead paint or like harmful products that are going to cost you a fortune to remove? Would you like to live there? If you don’t then don’t expect others to. Remember whilst more expensive houses may cost more they tend to attract better class of tenants and less maintenance costs as well as higher rental returns. Remember there are always more houses out there it the buyer is stuck on a price thats no good for you, don’t be afraid to walk away. Never buy a house on emotion!
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3) Do it yourself:- Unless you have a huge portfolio of real estate under your control try to do it yourself and you will save a lot more. If you engage a real esate agent to rent your house they will charge between 10%-15% of the rental income, in return you get very little. They will rent out the house, may inspect once or twice a year (some agents will charge extra for this privilege) and you don’t have the choice of the tenants. Do it yourself and save the money. Pay a small fee to join online real estate black list – (this is a list that blacklists bad tenants) and you are in the same position as them. A real estate first goal is not to please you but to ensure they get their cut – this may mean they make decisions that are not in your best interest, but in theirs (e.g. they may get kick backs from their tradesman and other relationships – in my case they repaired a hot water cylinder without my permission – the cylinder was less than a year old and still under warranty – thus I could of got it repaired for free, was I angry – you bet). Don’t forget with agents its your house, if they are not keeping you satisfied, change agents. In regards to maintenance tradesman are hugely expensive, whatever you can do yourself, do. For example, changing a tap washer is an easy thing to do, some plumbers charge $100 just to pay a visit.
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4) There is more than Rent. Remember to factor in the rise in real estate prices. You may be able to buy a cheap house in a country town, but if that town has shown no growth and is unlikely to grow then you will not be able to resell the house at the later stage for a much increased price. What creates regularly increasing house prices is even increasing demand. Be careful buying in places like a mining town or a town with one industry, mine resources are limited and one industry towns can turn into ghost towns overnight if the main factory closes. Play it safe buy in towns and cities where growth has been and will continue to be good. Therefore don’t just consider the rate of return on investment in terms of rent, but also factor in capital growth. If there is likely to be little or no capital growth the rental returns need to be higher – if they aren’t, forget it and keep looking. When a place is vacant charging too high a rent will ensure it takes weeks to fine a new tenant – every week it is unrented is costing you between $5-$10 a week in rent – (e.g. which is better renting a house for a year at $400 a week or $380 a week – if the fails to rent for four weeks at $400 even if you finally rent it at $400 you have lost out ($20 extra rent X 48 weeks – ($960) (4x$380= 1520)- if you’d rented it straight away at $380 a week – you would have been $560 better off for the year)

5) Good tenants are worth keeping. If you have good tenants who are looking after the house, you don’t alway have to keeping raising the rent every year with the general market increase – reward good tenants and increase your likelihood of retaining them by giving them a discount on the market rate. If the tenant puts in a garden and trees and other landscaping, the capital value they are adding to your property may mean you should not hit them with the highest possible rent. tenants who damage a house or fail to pay rent can cost a fortune. It normally takes 6 weeks or more to evict a non-paying tenant, that can mean a big loss, doubly so if you are paying the mortgage.

How to Invest in Real Estate

You have sufficient savings and you have decided to invest in real estate. This type of investment generally carries fairly low risk and stable returns. To achieve success, you need to master the art of investing. Find out how to get started.

Choose a strategy.

The most widely used real estate investment strategy is the purchase of a rental property. However, it is not the only one. You can also earn rental income by putting money in a specialized investment group. You can put your money in a specialized trust and earn dividends. Another highly popular strategy with seasoned investors is flipping. It involves purchasing a property and selling it quickly for profit. The first two options carry lower risk, but they generate returns much more slowly.

Prepare a business plan.

Investing in real estate is just like any other business. You will need a solid strategy for reaching the goals which you have set for yourself. Take your time to outline the steps which you have to follow and to evaluate your position based on your strengths and weaknesses. It is essential for you to get your finances and credit record in order so that you are ready for investing.

You should also look into the legal aspects of your new business. You should definitely consider investing via a legal entity instead of buying the property in your own name. This will help to reduce the risk of loss significantly.

Use a foolproof tactic for property selection.

The tactic which you use should be based on two major steps. The first one is extensive search. You should check all local listings including ones for auctions. You should work with a specialist real estate agent who can connect you directly to distressed owners. Generally, you should not limit your search to houses in your neighborhood. You should cover the largest possible area and consider all types of properties for sale.

The second step involves property evaluation based on cash flow analysis. You need to calculate how much rental income you will earn every month. The rule of thumb is for the cash flow income to be at least 1 per cent of the property price. You should also calculate the expected profit based on mortgage payments and other expenses.

Work with experienced experts.

The investors who are successful have the best people on their team. You should work with a real estate agent who specializes in working with investors and who has excellent record of achievement. In this way, you will be able to secure the most profitable deals. You need to find an expert mortgage specialists as well. This can be a broker or a loan officer. The expert will help you to get the most affordable financing deal.

Keep learning and networking.

It is extremely valuable to attend a real estate investing course before you begin. You should keep up with the trends and attend other courses, seminars and similar events on a regular basis. Networking is also important for success in this business. You will benefit from joining a professional association in your local area so that you can get valuable insight and learn from the experience of others. With the right contacts, you can secure ever better deals.

With the right strategy, skills and people, you will make money from investing in real estate.