Investments: Concept Made "Easy"

by Brian Cody   via HELIUM

When you are considering investing your hard earned capital into purchasing residential rental property, you are taking risks in exchange of an expected reliable stream of income. The other purpose of investing your capital for purchasing real estate investment properties is for the expected capital appreciation of your property.

 Your goal should be to mitigate the risks of experiencing a negative cash flow or experiencing a long term capital loss of appreciation in your investment.  The following real estate investment tips will provide you with the common sense guidance to mitigate your potential losses. You want to develop a business plan as well as a property management plan for each of your properties that you want to purchase.  You also want to form a cash flow and financial plan to ensure that your investment properties will result in a positive cash flow.

 There are three things that an professional investor should consider when reviewing the purchase of real estate investment properties.  For each property you need to run a cash flow analysis.  You want to review the property condition of each unit.  You also need to consider the property location as well.

 There are a couple of cash flow analysis that you want to consider.  The first cash flow analysis is the capitalization rate analysis.  Let's say as an example you are considering purchasing a 4 family unit. The purchase price of a 4 family unit is $325,000.  The  rental income  will be $3,895 per month. The (PITI) Principle ,interest, taxes, & insurance is $1,807 per month.

 You will then take your rental income of $3,895 and subtract the (PITI) $1,807.  The result will be a net income of $2088 per month.  Your annual net cash flow will be $25,056.

 You will then take the property value of $325,000 and divide the net income of $25,056 and your capitalization rate will be 12.37% approximately.

 Some financial experts will also utilize a absorption rate analysis.  If you have an negative absorption rate analysis then your community that you are interested in purchasing investment property will show a contracting economy.

You also want to review the condition of the property itself.  Is the properties conditions' meeting local and state housing code standards?  Is the property free of lead paint?  Does the property have newer windows, roof, vinyl siding?  Is the properties heating and air conditioning units new or old?  Is there plenty of parking for your tenant?

 Ask yourself this question would you want to live in the property that you are considering to rent to Tenants?

 Review current macro economic statistics that are reported by the Bureau of Labor Statistics.  Contact your areas local chamber of commerce and the city/towns office of economic development for information on the local economic vitality.

 Does your town a robust big box retailers near by such as Best Buy, Home depot, Wal Mart, Target, Sears or JC Penny?  Is your community growing or contracting?

 Follow some of the ideas in this article  and you will mitigate your risks when it comes to real estate investment.  You want to ensure that you have an expected stream of reliable income as well as potential capital improvement.

Keeping It "Real" Estate     by Shelly Adams  VIA HELIUM

It's a buyer's market! It's a seller's market! The real estate bubble is about to burst! Housing prices are inflated! Fannie Mae! Freddie Mac! What does it all mean?

Investing in real estate can be very confusing, especially in today's economy. However, there may never have been a better time to invest. Hey, the stock markets not getting you anywhere.Now, forget what you hear on 2 AM infomercials on how to make $450,000 your first week. Those guys are trying to sell you a set of DVD's for $69.95.

The first rule of thumb is to decide what your goals are with investing. Are you wanting to buy a fixer-upper to rent or flip or are you looking at a single family home to live in? Perhaps a commercial building?

Then use some good ole common sense. How long has the property been on the market? How motivated is the seller? Where is the property? What type of renovations are you looking at? Do your homework.

A good market analysis will let you know what comparable properties have sold for, how long they were on the market, and how well the market is progressing in that area. If a similar property being used for the same purpose in the same neck of the woods sold for $100 per square foot after being on the market for 12 months and the asking price for your property is $120 per square foot, that might be an "I don't think so" property. Whatever you do, don't get swept away by one particular feature of that property. I once bought a fixer upper because it had a beautiful hand sculpted 12 foot ceiling in the living room. The property was in a terrible neighborhood and required more renovation than imaginable. It was a passion buy. Lesson learned.

Next, what type of renovations are needed and how will you get those done? If you're going to do the work yourself, you might save money, but do you honestly have the time? Time is also money, right?

Before buying, have a contractor come over and give estimates on the job. Make sure to check out the central heat/air and plumbing, check for termite infestation, mold problems, etc. If you're not sure about what to look for, you can hire a home inspector to check it all out.

How motivated is your seller? In today's market, many people are in real trouble for a number of reasons. Many people cannot afford their mortgage. It's unfortunate, but for investors, it can really make for a good buy. Banks or mortgage companies have lists of foreclosures and preforeclosures. Talk with them and let them know what you want. It is much easier for a lending company to offer the home to you at a discounted price than to go through the hassle of waiting for a traditional resale. If someone is in trouble on their mortgage, they might be willing to let you buy their house for their balance. It's better than letting their credit go in the tank.

And don't forget the three rules of real estate. Come on, you know what they are. Location. Location. Location. If you can't buy in a prime location, that's ok. Some of the best buys are actually in pre-prime location. Up and comings, if you will. Look for neighborhoods that are just beginning to get facelifts.

And last but not least. The most important thing to remember about investing is to have fun doing it.

by Stella Kaye    VIA HELIUM

First and foremost, real estate investment is not like any other investment; you must be prepared to tie up your money for a good number of years. It isn’t for those who may require instant access to their cash.

Buying an investment property is not like having your money sitting in the bank and earning interest; it won’t produce a passive income from day one (although it may do so eventually) and you will have to work hard to keep your property well-maintained in the meantime.Any real estate investment will likely cost you money in the short term. Even a new build will cost you in ongoing management fees. Can you afford the outlay and expenditure this will likely bring?

As with any other type of investment there are no guarantees; the small print will always warn you that your investments can go down as well as up.

You must leave yourself with enough spare cash for every eventuality when it comes to property investment. What if a boiler packs up in the depths of winter? What if the roof needs repair? What if the tenant withholds rent until essential works are done? You could soon find yourself in the unenviable position where your property is costing more money than you have coming in and you may thus stand to lose over the short term rather than gain  If you cannot secure the finance you need to put things right you will be in a whole lot of trouble.

Property investment will only prove lucrative after a good number of years so the essential part of the equation is time. Time + Bricks = Money. You must allow the time for your property investment to increase in value and produce equity.

The days of fast flips regarding property investment have long gone and speculators who managed to make a fast buck back then can rarely do so now. There is a vast difference between a property speculator and a real estate investor. The speculator takes real risks that may cause him to lose everything but a true investor takes a calculated risk that may leave him virtually penniless in the short term but will pay off over a longer period of time. Which one would you rather be?

Everything in life can be a bit of a gamble but to succeed in real estate investment nowadays you have to a true investor rather than speculator.

Your number one priority must be to meet all your financial obligations and commitments to banks and other financial institutions. Never mess up your excellent credit score and always treat it as if it were an entrance ticket to Heaven.

There are no hard and fast rules on how to succeed in real estate investment but you must have direction, determination and drive.

You will make mistakes and lots of them but the trick is to turn your mistakes around to your advantage, remain flexible and be prepared to change your strategies if they are clearly not working.

The motivation that prompted you to become interested in real estate investment in the first place must continue as a permanent part of your personality and you will need to have limitless amounts of entrepreneurial spirit.

Never forget that each day will present new problems which will serve as a continual learning process to make you stronger and if you have a long-term commitment to your chosen vocation as a real estate investor you will be very likely to succeed and reap the rewards of all your hard work.