Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow -- whether it is pre-tax or after-tax -- requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea.

Use Leverage

One of most important factors in determining a solid investment is amount of equity you are purchasing. Equity is difference between actual worth of property and balanced owed on mortgage.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth extra work. When compared to other financial investments, like bonds or CD's, return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it's time to sell or refinance. Determining proper amount of equity may require assistance of a real estate professional.

(c) Copyright 2005 Madan Ahluwalia. All rights reserved.

If last rent increase was recent, your tenants may be considering a move. If tenants have a short-term lease, they may be living there simply to attract unsuspecting buyers. It is also important to collect tenants' security deposits at closing.

6. Assess The Tax Situation

Taxes are an integral part of successful real estate investing, and they often make difference between a positive cash flow and a negative one. Know tax situation, and see how it can be manipulated to your advantage. It may be a good idea to consult a tax advisor. 7. Investigate Insurance Coverage

If seller's coverage is based on lower-than-current replacement value, your insurance cost may increase when you pay a higher purchase price.

8. Confirm Utility Costs

Ask local utilities to verify recent utility expenses, especially if any of these costs are included in your tenant's rent.

9. Consult Your Accountant

Taxation is a key element of successful real estate investing, so be sure to find an accountant who is well-versed with constantly evolving tax code.

10. Inspect!

Make sure that you always perform a thorough inspection of property before buying it. Never, ever buy any property without at least examining site. In some cases, hiring professional inspectors to examine structural mechanical system may be a sound investment.

(c) Copyright 2005 Madan Ahluwalia. All rights reserved.