Category: Finance, Real Estate.
As the future of the housing market wobbles on its axis, investors try to determine their next big move.
Falling house prices, soaring foreclosures and rising inventory homes on the market may be enough to stop investors from pulling out their wallets. Now, unlike anytime in the last several years, that decision is a hard one to make. The changing market, does not necessarily, however mean it s time to jump ship. The following are some rules that can reduce the risk of investing during these trying times. On the other hand, it does demand the investor pay closer attention to his or her next payout. Pay Close Attention To the Market. Regardless of what everyone is telling you about your prospect investment, take a look at the property and compare it to other homes in the area.
When shopping for investment property, check out what other local homes are selling for. What do you think the property is worth and what do you think you can get out of it? This rule is the same when considering rental property. This will tell you the true value of the property better than any real estate agent or financial statistics. If you are looking to invest in rentals, do some shopping around. In order for your rental to be successful, rent in the area should be reasonably priced.
Find out what the average rent is in the area for a place comparable to what you are considering purchasing. If it is too high, renters will be more apt to purchase a home. Now is not the time to dive into a market you aren t familiar with. Do What You Do Best. Instead, especially if you are a novice real estate investor, focus your energy on investments you are familiar with. If this is the case, you will feel more comfortable investing in a home of this nature. Maybe you have always had an interest in fixer- uppers and have done some remodeling of your own.
Capitalize on what you already know. Be Prepared. Then, as you learn the industry, expand your investments accordingly. Real estate investing can come with a lot of surprises, especially on the financial end of things. You should be able to regurgitate the statements and explain them in laymen terms to anyone. Before you invest in property, make sure you completely understand the financial statements.
This is critical to your success. If you are working with an account, ask to see the cash flow statement and have it explained to you. You don t want to be surprised with operating costs, or taxes, vacancy costs. By knowing and understanding the financial end of things, you can head off bad investments. Just as in financial statements, a savvy investor understands taxes and how they can affect their cash flow. Know the Tax Situation.
You must know the tax situation in order to benefit from it and to prevent it from biting you in the backside. If you don t understand taxes, consult a tax advisor who can show you ways to capitalize on tax laws.
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