Real Estate Investment Tips
By Steve Gillman - 2008
Here are eighteen random - but hopefully useful - real estate
investment tips, including a few you probably haven't read before.
Who Are Your Tenants?
When buying apartment buildings, review the applications of
the current tenants. Of course they should have employment listed,
but consider the employers. Are they stable companies that are
likely to be around for a long time? Are many (or even most)
of the tenants employed by the same company? If so, you could
have a big problem with rent collection if that one company has
trouble or lays off employees.
Neighborhood Safety
To gauge how safe a neighborhood is, you can talk to the local
police. The most important issue is whether the area is stable
(or getting safer), or if crime rates are increasing. The latter
is a bad sign for investments. You might also walk the area during
the day and again at night, to see how the streets are after
dark. Some areas are safe during the day, but are full of criminal
activity at night.
Future of the Community
Companies and organizations that are a part of why people
choose to live where they do can close or fail, causing declining
property values. For example, a hospital closing can seriously
affect the desire of people to move to an area, in addition to
the damage the loss of jobs can do. Ask around, to see if hospitals,
fire stations and other important local institutions have been
in trouble or are considering closing.
Your Personal Life
Consider what is going on - and will be going on - in your
personal life when deciding on a real estate investing strategy.
Be sure that the money you are investing won't be needed for
other purposes anytime soon, and that you'll have the time to
complete any projects you start on schedule. Part-time investors
have been known to take an extra year to complete a fixer upper,
for example, because they don't have enough time after working
too many hours at work. A years holding costs come straight out
of the profits in these cases.
Insurance Claims
When buying insurance, ask to see the forms that you'll have
to fill out to file a claim. Does it make sense to you? Ask how
long it takes to get paid on a claim, and even ask for a recent
example. You want a company that is not just reasonable in their
charges, but fast and easy to deal with.
Safety of Insurance
Cheap insurance isn't a good deal if the company goes out
of business by the time you have a claim. Check the financial
condition of the insurance companies you are considering using.
You can get rating of the various insurers at www.insure.com,
www.ambest.com, or www.moodys.com.
Hidden Problems
New repairs and improvements may be hiding something. A new
textured ceiling often hides cracks, for example, and new siding
can hide rotten wood. New paint on basement walls may be covering
water stains from previous leakage. If you think this may be
the case, ask the seller, and have him verify the condition in
writing.
Inspectors Who Are Not Contractors
Don't use inspectors who hope to be hired by you later to
do necessary repairs. They may find "problems" just
to generate business for themselves. Hire an inspector that is
just there to inspect.
Floor Jacks
Typical basement jacks look like pipes that have an adjustable
screw at the top. They are used to level the floor above, or
to strengthen an older floor to prevent sagging. They may indicate
serious sagging in the structure, so get a professional inspector
if you see them.
DIY Inspection
There are many things that you probably intend to do when
looking at a house, but forget to do. These include turning on
all faucets, flushing all toilets, and testing the heater and
air conditioner. One sure way to remember all of these is to
have a good inspection checklist for yourself and use it every
time you look at a house.
Note:
This page continues with more real estate investment tips,
on the page More Real Estate
Investor Tips.
(You'll also find a list of other pages related to investing
there.)
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