When it comes to investing, every investor has an investment strategy and specific investment goals. But here are investment tips all real estate investors should consider. There are incredible values in the Phoenix area with all the foreclosed Phoenix homes in Chandler, Gilbert, Mesa, Scottsdale, Tempe and Queen Creek.
Investors are cleaning up! July 2010 statistics are out and even though foreclosures and short sales are dominating Phoenix homes sales, investor "fix and flips" are 40% of sales according to ASU. If these investors are making money, I am thinking they are buying at least as many homes as they sold and that puts investors being involved in 45-50% of sales.
The traditional buyer doesn't have the resources, the time, the connection and the experience to remodel a home. You need money and contacts to make this work for you. Since so many people are loosing their homes, the rental market is strong. That gives investors the option to fix and flip or fix, rent and hold or a combination.
The big problem for investors is raising the money. If you have money in your IRA that is just sitting their, you can set up a self-directed IRA and transfer funds from your traditional IRA to fund your real estate investment plan. Let's talk about your plans and see what is doable in this market. Call me! Compare Property Values and Rents Financial statistics only go so far; the best measure of a property's market value is often the sale prices of nearby properties. The same holds true for area rents. Do a rent survey of the area before you buy to make sure the rental income you can expect is sufficient to support your carrying costs. Low priced homes in the area are often indicative of the purchasing power of prospective home buyers and tenants in the area.
Be Prudent - Tax laws may change Don't base your tax investment entirely on current tax laws. The tax code is constantly changing, but a good investment is a good investment regardless of the tax code. The right property with the right financing is what you want look for as an investor.
Specialize in something you know Start in a market segment you know. Whether you focus on fixer-uppers, foreclosures, starter homes, low-down payment properties, condominiums, or small apartment buildings, you'll benefit from experience by specializing in one aspect of investment real estate properties.
Know the Costs going in! Know the financial statements inside and out. What are operating expenses? What are loan payments? Vacancy costs? Taxes? What does the cash flow statement look like? These are key issues that must be addressed before making a solid investment.
Sadly, many investors fail to consistently keep good records or they may deny having any records because the numbers aren't attractive. You need to be prepared to do your homework.
Know where your tenants are coming from. If the last rent increase was recent, your tenants may be considering a move. If tenants have a short-term lease, they may be living there simply to attract unsuspecting buyers. It is also important to collect the tenant's security deposits at closing.
Assess the tax situation Taxes are an integral part of successful real estate investing, and they often make the difference between a positive cash flow and a negative one. Know the tax situation, and see how it can be manipulated to your advantage. It is a good idea to consult a tax adviser.
Investigate insurance coverage If seller's coverage is based on lower-than-current replacement value, your insurance cost may increase when you pay a higher purchase price. Contact your insurance company as soon as you contract and open escrow to purchase to make sure your insurance carrier will issue an insurance binder for the property. Also investigate prior insurance claims that would increase your costs while you own the investment property.
Confirm Utility Costs Ask the seller for copies of the local utility bills to verify recent utility expenses, especially if any of these costs are included in your tenant's rent.
Consult Your Accountant Taxation is a key element of successful real estate investing, so be sure to find an accountant who is well-versed with the constantly evolving tax code. And maintain good records of all expenses and income as they occur. Mistakes are made at the end of the tax year trying to recreate what happened all year long. It will definitely cost you more in the long run not to have good record keeping as part of your daily routine!
Inspect! Inspect! Inspect! Make sure you always perform a thorough investment property inspection before buying it. Never, ever buy any property without examining the property in person. Hiring a licensed professional inspector to examine the structure and mechanical systems is a sound purchase practice so you don't get surprised later. It is important to know what you are buying. Unknown deferred maintenance costs can undermine your investment plans. Consider having a Home Warranty Insurance Plan to pay for any unexpected repair expenses, as you build sufficient reserves saved from your investment income stream to eventually self-insure yourself.
Sam Elam Phoenix Real Estate Agent and Arizona Broker Associate Full time Phoenix REALTOR® since 1990 ABR, CRS, GRI, e-PRO Prudential Arizona Properties 3701 E. Baseline Road, Suite F-102, Gilbert, AZ 85234
(480) 213-1799 Cell (480) 467-4900 Office (800) 592-3360 Toll Free Email Samyour Phoenix real estate questions for expert advice.
For expert guidance with your next real estate transaction, call Sam at 480-213-1799 Phoenix Real Estate Agent and Arizona Real Estate Broker Full time real estate professional since 1990
Email Sam your Phoenix real estate questions for expert advice.