5 Essential Real Estate Investment Tips

By Terry Hurley

real estate investmentInvesting in real estate seems like a dream investment to many people. There is the opportunity to gain equity and perhaps generate a positive cash flow. The following investment tips are important to help the prospective buyer become successful as a real estate investor.

Investment Tip #1 – Decide if your your investment goals are long term or short term.
Historically, real estate has shown a consistent growth in value. As your property goes up in value and you pay down your mortgage balance, you increase your equity in the property and add to your overall net worth. If the real estate is a rental property, your tenants are making the payments for you. There also could be tax advantages available to you when you deal in a long term Real Estate Investment. A short term real estate investment also has it’s advantages because the numbers are so large. For example: you purchase a property in need of repairs for $50,000. Repairs are 10,000, holding cost, and selling costs total $5,000. You sell the property for $85,000 and close on the sale 6 months after purchase. You have netted a nice profit of $20,000

Investment Tip #2 – A good location is essential.
Location can be the difference between a good investment or a bad one. When you look at a property that you want to buy and rent out, you have to remember that this is where someone is going to live. You can improve the property but you can’t move the location. Look for rentals where there is always a demand for housing. Choosing properties in busy towns or cities is usually better then choosing ones in the country. There are more people so your property will be more in demand.

Investment Tip #3 – Don’t be afraid to look for a bargain.
Finding a property that is selling lower then fair market value isn’t as hard as it may seem. Foreclosures, sheriff sales and HUD repossessions all offer the possibility of finding property that will yield a significant profit. Good places to look for these bargains are local papers, courthouses and websites that list these types of properties. It is very important to check out the surrounding areas to see if the neighborhood is well maintained or getting run down. If the neighborhood is run down, or there are many boarded up houses, it may not be a good bargain after all. Buy in the best location you can afford.

Investment Tip #4 – Take the time to study the property.
Regardless of whether or not you are purchasing a bargain piece of real estate, make sure that you take the time to become familiar with the property. Learn to judge real estate so that you know when to go ahead with the deal and when to say “no”.

Investment Tip #5 – Learn real estate terminology and hone your negotiating skills.
Become familiar with the terms used by real estate agents and sellers. This will ensure that you will not be caught unaware and become confused by what is being said. All real estate investments require a fair amount of negotiation which is very important for your success as an investor.

Following these investments tips when looking for a property will help you to achieve your goals of increasing your net worth and and generating a positive cash flow.