|
| How to Minimise Risk in Real Estate Investment - part one - part two - by Neda Dabestani-Ryba Neda Dabestani-Ryba is a member of the President's Circle of Top Real Estate Professionals. |
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 you'll 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 you've 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. Don't get
caught up in the excitement - check everything:
rents, payment history, taxes, expenses, deposits,
future modifications... everything. Make sure you
have the right agent...it's 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. Don't 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&R's, by-laws, title
policies, mineral leases, inspection reports,
purchase contracts, insurance.. don't 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.
It's 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.
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 you'll 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 you've 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. Don't get
caught up in the excitement - check everything:
rents, payment history, taxes, expenses, deposits,
future modifications... everything. Make sure you
have the right agent...it's 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. Don't 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&R's, by-laws, title
policies, mineral leases, inspection reports,
purchase contracts, insurance.. don't 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.
It's 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.
| Estoppel letters, positive cash flow, tax benefits, minimise risk in real estate investment, real estate market, return on real estate investment, capital appreciation, property management, equity paydown, international investment, insurance policy, investment property, property inspection, property insurance coverage, Budapest, Hungary, debt load, property loan, debt, equity, financial portfolio, first time investor, professional real estate agent |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| FiloLog.com | currency converter | route planner | relocation to Hungary | Budapest | Hungarian culture | translation services |
 | |  | |  | |  | |  | |  | |  | |  |
| - - - - - - - - - - - - - - - - - - - - - - - - - - Buying or Renting a Home in Hungary - - - - - - - - - - - - - - - - - - - - - - - - - - |
| © 2008 Budapest-Propertyfinder.com | About us | Contact us |
| Disclaimer: the article serves merely information purposes. Due to its extent, it is neither an all round information nor shall it be qualified as legal advice. |
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. Don't 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.
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. Don't 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.
