How to Eliminate Risk in Real Estate Investment
By Neda Dabestani-Ryba Prudential Carruthers REALTORS
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 time to study their investment. They rely on traditional trends and gut feelings. Before you risk your investment take time to learn all you can about your market. By aligning yourself with right professional you can avoid these 12 common mistakes and youíll 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 things that need to be addressed before you make that investment. A service minded real estate professional can be a tremendous asset by taking time to evaluate your needs and making sure youíve got all your bases covered.
2. Not Checking out Seller or Sellers Agents Numbers - Claims of extremely high rates of return run rampant in real estate investment. Donít get caught up in excitement - check everything: rents, payment history, taxes, expenses, deposits, future modifications... everything. Make sure you have right agent...itís like having a good insurance policy against overlooking all 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 property and time management all need careful consideration. Remember this is not a Ďhands offí 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 unseasoned investor. A strain on your cash flow may cause you to sell investment before benefits of ownership are ever realized.
5. Failure to do a Thorough Inspection - Look under every rock! Hire a professional inspector. Ask tenants about pest problems, structural damage or reoccurring problems. Donít overlook anything! A value driven real estate professional will help you find right inspector and can help you avoid costly mistakes. When investing your hard earned money be sure and use sound business judgment!