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Real Estate Investment Tips

By - 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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