Monday, February 25, 2008

Study the Real Estate Market Consistently

Millions of people find pleasure in being mystified. Art mystifies them, so they gasp with pleasure and congratulate the artist on his or her skill. They see science as a mystery, so they don't even want to know what researchers are really up to. MN real estate investment mystifies them, and so they make the assumption that it's a big gamble and that some people are either quite lucky, or that they have an inborn gift.

They refuse to accept that succeeding in all three disciplines is just contingent on breaking it down into steps and following through. Readers of the Rich Dad, Poor Dad series by Robert Kiyosaki will realize that, in real estate investing, there are 5 important steps necessary to succeed. Investor should:

1.Learn how to speak in the language of real estate investment. This means to take in the basics of finance and accounting and know how to read financial statements. These skills will help determine whether a property is assets and potential drains. It is also important to learn about tax law so that you do not make costly mistakes, but also to know what the best deductions for real estate are. Knowing the basics of these subjects will give the investor the power to communicate effectively with his accountant and lawyers.

2.Keep experts close by. This means networking and studying the people who may wind up on the team of real estate experts which he will hire to assist him in the location and evaluation of properties. The smart investor will get to know the real estate community in the city in which he plans to invest his money, and thereby get to know the city.

3.Study the market consistently and closely. The investor should study up on various cities and see what the experts say about them, but he should also evaluate them for himself. He should study his home city twice as thoroughly, if that is the he is planning on putting his investment funds there. He should familiarize himself with the economy and which areas are good news, and which are bad news. He should learn what the rents in his marker and decide if a piece of property located in that area would assist him in reaching his financial goals. The investor should visit as many properties as he can with his team of experts, even if he is not actually ready to make a purchase.

4.The investor should know the right and wrong way to negotiate . Many people simply have incorrect notions about dealing with sellers. These people are under the impression that the object of each and every negotiation is reach a closing regardless of the circumstances, and to strong-arm the seller into ceding to his demands. If it turns out that the investor is able to make the numbers add up in his favor, and the seller agrees to his terms of sale, that is the point at which the purchaser should go ahead with the purchase of the property. If this is not true, the buyer should walk away. “The ABCs of Real Estate Investing,” by Ken McElroy states that the investor should go into every negotiation assuming he will walk away in the end.

5. Take care of your MN properties. This comprises just what you'd think. Conduct the required repairs and renovations on the property and fill any empty units. Make sure the renters' wants and needs are addressed.
This description represents a streamlined version of the process, however these five simple steps show that real estate investment is a process which can be learned by anyone. Nothing about it is really mysterious about it.

Sunday, February 10, 2008

Investment Property - What is The Best Kind For You?

Part of learning how to invest in real estate is figuring out what kind of property to look for. There are many different choices. The investor can purchase houses, duplexes, condominiums or apartment buildings - and that’s just the tip of the iceberg. He/she can buy lots and build investment property or purchase lots and rent them to people who build on them. He/she can make “in really good shape” a part of their search criteria, or he/she can look for a Minnesota property that appears to be in rougher condition than it actually is, in order to get a good price. They can hunt for owners who are facing foreclosure in the hope that they finds someone who is hoping to put his/her property out of their mind so that they can just be rid of it.

There are lots of possibilities. The question is, which property is the right property for you?
Ultimately, the best investment property is the one that will make the most money while costing the least amount to be rented out. Getting a property up to speed might involve renovation to bring a building up to code – adding up-to-date appliances and such. It may involve a fresh coat of paint, or even evicting some undesirable tenants. What the potential new owner has to determine is, if the building's problems are fixable.

For instance, in his book Ken McElroy in his book “The ABCs of Investing,” writes about an investor who had bought a building without even viewing the site, and found himself saddled with some tenants who who were bad and dangerous The investment property was in a bad part of the city where the owner should never have bought a property. By the time he got around to contracting McElroy's property management company, he had already lost a bunch of potential rental income due to delinquency.

McElroy's team repaired as much as they could. Got rid of the undesirable tenants and hired security for the building, but they could do nothing about the quality of the surrounding neighborhood. The property would never be one that renters with a lot of choices would want to live it, simply based on its location. This property would never get the rent that it could have if it had simply been situated in another area. Most of the building's issues were just unfixable.

The old saying, “Location, location, location” is important for a reason. A property’s Location might be the single most important factor the MN real estate investor should consider when searching for potential properties to invest in.

Besides simple viability, an investor needs to think about how he/she wants to go about handling his/her investments. McElroy advises investors to contract a property management firm for the expertise and to free the real estate investor to seek out additional investments, but some investors just like managing their property by themselves. That type of person might want to consider purchasing property that is little enough for him/her to take care of on his/her own. Some investors are unwilling working with partners or investors and will be restricted by that too. When this is the case, less expensive and smaller is probably the best option for them.

In the end, Mr. McElroy also recommends the investor not assume that he/she should begin with a tiny property. If he/she has learned enough to buy investment property in the first place, he/she can learn how to use other people's money. He/she should remember, however, what they are comfortable doing - or what they would consider the most favorable approach. The opportunities are, after all, almost infinite.