Real Estate Investing Tips
By Steve Gillman - 2010
Real estate investing tips tend to be a bit vague, like "invest
in the right location," or "make sure the numbers work."
Actually, tips like these are important principles to remember.
However, since they have been well represented in other articles,
I want to share a few more specific tips with you.
1. Partnering. If you do a deal with partners, be the money
or the management, but not both. Group decisions tend not to
work well in real estate, and will cause you much stress. Once
you decide on and agree to a plan, step back if you are investing
the capital, and let your partner do his thing. Of course, step
up and take control if you are managing the project.
2. Negotiating. Ask a seller outright, "What do you want
to get out of this?" You can waste valuable time talking
about things that don't interest him or her. Once you get a clear
answer, you can decide if you can give them what they want, and
still get what you need.
3. Letting the market speak. As the cabinet guy looked to
me for a decision, I realized that I knew nothing at all about
which types of cabinets people like. I asked him which ones others
were choosing, and he pointed to one that three quarters of his
last forty customers had chosen. That's the one I want, I told
him. Why argue with the market you are trying to sell to?
4. Market comparables. The real estate agent may be showing
you only the comparable sales that make the property look more
valuable. Do your own research. Some counties have made it easy
now, with sales prices online. You can also search any number
of sites with MLS listings, just to get an idea about the asking
prices of other nearby properties.
5. Running the numbers. It is about the numbers, and if it
is income property, it's about one number in particular: cash
flow. Whatever the local formulas are, whether gross rent multipliers
or capitalization rates or whatever, just be sure that after
every last expense you'll have cash flow from the very first
6. Investing safely. Investing isn't gambling. There is always
risk, but the difference is that the odds are in your favor.
If not, you are gambling. This why you shouldn't invest based
on continued price increases. There is no guarantee that prices
will continue up at any particular rate. Do deals that work even
if prices go nowhere, and if values go up, you're that much better
All the "rules" and real estate tips are really
just guidelines. Even the rule about cash flow can be broken
if you know that rents can be raised soon, for example. In the
end you have to use common sense and learn from experience. You
can't trade in your brain for rules, formulas and real estate
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