| |
| |
|
Real Estate Information |
|
|
Beat the Crowd when Investing in Real Estate
We all are thinking about it and some of us are actually taking action and getting their hands on real estate investment properties. The longer the NY Stock Exchanges doesn't produce desirable returns the more people are starting with real estate investments. For most of us the obvious choice of properties are single family homes. Although you can invest in real estate without owning a home, most people follow the experience they made while purchasing their own home. This is familiar ground and the learning curve for doing a real estate deal of this type is pretty slim. Of course there's a drawback with this approach. The competition is fierce and there are markets where investors are artificially driving up the cost of the properties while completely discouraging first time home buyers. If this is the case, the burst of the real estate bubble is just a matter of time. How do you avoid these situations and still successfully invest in real estate? How do you get ahead of the competition and be prepared for bad times in real estate investments as well? The only answer I have is commercial real estate. Why commercial real estate you might ask? Commercial real estate is a solid investment in good and bad times of the local real estate market. The commercial real estate I'm referring to are multi unit apartment buildings. Yes you will become a landlord and No you don't have to do the work by yourself. You are the owner and not the manager of the apartment building. The cost of owning and managing the building is part of your expenses and will be covered by the rent income. Apartment buildings are considered commercial real estate if there are 5 or more units. To make the numbers work you should consider to either own multiple small apartment buildings or you should opt for bigger buildings. This will keep the expense to income ratio at a positive cash flow. Owning rental properties is all about positive cash flow. With investing in single family homes it is easy to achieve positive cash flow. Even if your rent income doesn't cover your expenses 100%, the appreciation of the house will contribute to the positive cash flow. With commercial real estate the rules are different. While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate doesn't care about the value appreciation of other buildings. The value of the property is solely based on the rent income. To increase the value of a commercial real estate you need to find a way to increase the rent income. The formula on how this is calculated would be too much for this short article. I listed a few very helpful books where you can find all the details. What's another advantage to invest in commercial real estate? Commercial real estate financing is completely different than financing a single family home. While financing a single family home you are at the mercy of lenders who want to make sure that you are in the position to pay for the house with your personal income. Commercial real estate financing is based in the properties ability to produce positive cash flow and to cover the financing cost. After reading all these information about commercial real estate you want to go out there and dive into the deals. Not so fast. First, you need to learn as much about real estate as possible. In commercial real estate you're dealing with professionals. If you come across too much as a newbie you will waste these guys's time and your commercial real estate career ended before it actually started. Second, no commercial real estate lender will lend you any money if you can't show at least a little bit of real estate investment experience. What's the solution to this? Go out there and do one or two single family home deals yourself. It doesn't matter if you make huge profits to start off with. Most newbie investors are loosing money on their first deal anyway. If you can manage to show positive cash flow with your single family home deals you are ahead of the pack. My advice, buy a small single family home in a decent neighborhood and rent it immediately. This will keep your out of the pocket expenses at a minimum and you will have rent income to cover for your monthly expenses. Bonus, you gain experience as an investor and as a landlord. Here's another observation I made during my real estate investment career. Most people like to analyze, learn, discuss and analyze some more. They never actually got to do a real estate deal. They love to talk about real estate investments, but never did it themselves. My approach to real estate investment was simple. - I bought some books about real estate investment. - I read every single one of them. - I put together a simple plan on how I want to get started. - I started looking for properties. - I bought my first investment property 30 days after I started reading my first book. - I made positive cash flow with all of my properties so far. What is my point? You have to go out there and practice what you've learned. The only valid credential in the real estate business is practical experience. Having a couple of deals under your belt, you can go out there and start looking at commercial real estate and even impress seasoned investors with your knowledge. Because you made this experience by yourself and you know what you're talking about. Book reference for commercial real estate investments: Gary W. Eldred, PhD: "Make Money with Small Income Properties" Jack Cummings: "Real Estate Financing and Investment Manual" You will find these books and many more on my real estate investment website at http://www.suncoastrenttoown.com/author_directory.htm Sincerely, Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner.Learn more about real estate investments at http://www.suncoastrenttoown.com or send a blank email to mailto:suncoastrenttoown@getresponse.com
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
How To Negotiate A Higher Price For Your House Negotiation is where many FSBO home sellers really have problems. The wrong attitude or a slip of the tongue could cost you thousands. Staging Homes for Top-Dollar Sales Wouldn't it be nice to have Roger Hazard's design team from "Sell This House" come visit for a weekend?Many "redecorators" and designers offer "Staging Homes" services from $250 to $5,000. These services usually give good advice, some help with the actual work involved, and others even move in new furniture for you. Homes For Sell By Owner - FSBOs and Buyer Brokers You're selling your home as a FSBO (for sale by owner) and you get annoyed when real estate brokers call you, right? That's a reasonable response when you're doing all the work to market your property to save thousands of dollars in broker commissions. However, when a "buyer broker" calls, you might want to listen. Cutting Edge Real Estate: Is There Anything New? Part 1 The world of real estate has pretty much stayed the same for decades. It's no different today than it was 50 years ago. 10 Tips for Investing in Distressed or Foreclosed Properties 1. Search on the world wide web for distressed or foreclosed properties as a starting point. Buy to Let Property Investment In recent years buy to let has been a popular way of investing in residential property. Stock markets are out of favour with many investors who have seen the values of their portfolios, endowment policies and pension funds shrink, whereas property has generally continued to rise in value. The Secret to Maximum Real Estate Profits: Lighting Lighting is the most important detail of interior Design Psychology for selling houses. Lighting influences a prospective buyer's feelings within a space more than any other interior design element. To Buy or Not to Buy Purchasing a home is a major emotional and financial decision. Often times, people want to buy a home; however, emotionally cannot afford to commit to the home-buying process. Advantages to Buying or Owning a Condominium Condos have become an increasingly attractive home ownership option for singles, young couples, families and retired couples (that's just about everybody!). A condo is a viable option for anyone who wants to own a home without the worry of repairs, maintenance and dreaded chores like snow shoveling. Investor Banned From Offering Property For Rent Do you realize that you might be prevented from renting your investment home? Prohibiting property owners from leasing their properties is a trend that is growing increasingly popular with some developers and many Homeowners' Associations (HOA).It's rare that you can buy a new home in a development that does have a HOA. Selling by Owner = Saving by Owner? According to the National Association of Realtors, For Sale By Owner (FSBO) home sellers comprised nearly 14% of all home sales in the United States in 2003. The Boston Globe reported that nearly 25% of homes sold in that area during that same time period were FSBOs. Why Use a Property Manager? Most experienced property investors use property managers. Why? Because they make you money. Do You Speak Real Estate? Anyone interested in real estate should be able to talk the talk. Here is a list of common phrases and words with ashort explanation. Appraisal vs. Market Value: How to Avoid Pitfalls in the Sale of Your Home When you sell your home, appraisers use comps (comparable market sales) of local properties sold within the last six months to value your home. With today's rapidly rising seller's market, six-month-old information is ancient history. Odors Can Make or Break The Sale of Your Home It's amazing how important the sense of smell is to many people. If you're selling your home, and this applies across the board to houses, townhouses, condos, apartments, or whatever, you need to be aware of the power of odors. Finding Structural Problems During Escrow - Small Rural Home Example In rural home purchases, the transaction is often subject to a satisfactory home inspection being done. Any imperfections are usually corrected during escrow. Real Estate: Reasons and Priorities for Purchasing Property Real Estate: Reasons and Priorities for Purchasing Property. It's not just about Real Estate as an Investment. Get Rich With Mobile Homes Does the myth that mobile homes depreciate in value keep you from investing in them? Well, they do lose value in a park, on a rented lot. Mobile homes with real estate, however, are an entirely different investment. RESPA: The Real Estate Settlement Procedures Act The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. One of its purposes is to help consumers become better shoppers for settlement services. How to Build a Real Estate Investing Power Team As you continue to read about real estate investing, you will no doubt come across the term 'power team'. What is this 'power team'? A power team is a group of people without whom successful real estate investing becomes very difficult, if not impossible.
|
| home | site map |
| © 2006 TIGER MEDIA |
