Top Ten Real Estate Investing Undercover Keys

TIP #1

No money down real estate investing usually isn't.

There will usually be some money required to put a transaction together and make it profitable. It may be closing costs, repairs or upgrading, or just some cash to hold the property, whatever. But somewhere, some money will be needed on every real estate investing transaction.

You may be able to finance every dollar you need, but it can come back to haunt you in the long run in the form of mortgage payments you cannot afford to make.

Follow good real estate investing principles and do your homework on the financials, including the total cost of that 'no money down' transaction.

TIP #2

Circumstances affecting a rehab may be impossible to foresee. Weather can play a critical role, for instance, when you do roof repairs, concrete work, or exterior painting and need the help of sunny skies. When tornadoes and other natural disasters strike, even on the other side of the country, construction materials can suddenly become more expensive - the price of plywood can jump 20 percent overnight.

A good rule of thumb is to multiply your estimated rehab costs by .2 (20%) and add that to the estimated cost when you are analyzing a potential project.

If this small addition kills the deal for you, it is probably best to move on to another deal.

TIP #3

Storage sheds can be a valuable additional source of income on your rental property. You can rent them to tenants or you could put in a coin-operated washer and dryer. With a larger income property, you could install cold-drink dispensers.

Anything you can do to add value to your tenants adds value to your real estate investing.

TIP #4

Any way you can reduce expenses raises net income. By installing a new $4,000 furnace that saves $800/year on heating costs you turn a $4,000 investment into a $10,000 higher sales price.

To reduce costs and increase profits on your rental real estate investing you can also add insulation to reduce the heating costs. Or, if you're paying $80/month for lawn care one of the tenants might do it for $40. You could buy cheaper insurance.

Look for ways you can reduce your expenses and raise your net income on your rental real estate investing.

Traditional real estate investments call for certain qualities, such as a good credit record, a sound financial position, an appreciable income, bundles of dollars for a down payment, and good lenders by your side.

TIP #5

Increasing the net profit on any real estate investment is the surest way to get the highest price when you decide to sell. Be sure to implement any changes several months prior to placing the real estate investing on the market in order to show the effect of the change in the balance sheet.

Learning to do the math on rental real estate investing really does matter.

TIP #6

Real Estate Investing is not a complicated game that only the wealthy can play if you take the time to learn how to do it first. Every good professional investor uses a process to analyze the financial feasibility of every investment property.

Here's a simple nine simple step method that good real estate investors use in analyzing any type or size investment property. It is called a property analysis and you should take the time to learn its value

1. Expected Gross Income (Income if 100% occupied)

2. Subtract your allowance for vacancies (varies per property, use 20% to start)

3. You now have the Operating Income before expenses

4. Subtract Operating Expenses (Taxes, insurance, utilities, repairs and maintenance etc.)

5. Equals: Operating Income (before Mtg. Pmts.)

6. Subtract Mortgage Payments (principal and interest)

7. Equals Cash Flow

8. Multiply the Cash Flow by 12 (1 year income) and divide that number by your Initial Investment

9. View the Total Return On Investment (ROI). This number should be better than what you can get at a local bank if your Initial Investment would sit there for a year or you should seriously analyze this real estate investing opportunity again!

TIP #7

Should you decide to use one, a real estate agent does do a lot of leg work during a sale, but all of it comes at a cost. Hefty brokerage commissions of 6% or more turn many investors off of the idea of using an agent and onto the idea of selling the property themselves. If this sounds like something you would like to do, follow these steps for selling your real estate investment yourself.

Step 1. Calculate the asking price for the property

Hire a professional appraiser to price the home or check the sales prices of comparable homes in the same area of your real estate investment. You can visit your local court house and compare similar recent real estate sale prices within a few miles of your property. Many court records are now available on the Internet.

Always take into consideration the current real estate market. If the market is a buyer's market, you may have to lower your price. If it is a seller's market, you might be able to ask more than the market value for the property.

Step 2. Market the property

Advertise the property and show it to perspective buyers. Make sure you have the necessary purchase contract forms. The purchase contract will need to be signed by you and the buyer once you have negotiated the deal.

Step 3. Close the deal.

You will need a closing agent to perform the closing, which may be an escrow company, a title company or real estate attorney, depending on your area. There is a lot of paperwork needed here as you need to provide the buyer with disclosure statements and he will need to provide you with a loan commitment letter.

Inspections are also performed during this time and a title search will be completed by your closing agent. To complete the closing, you will need to meet with the closing agent and buyer to sign the paperwork. pay any closing fees, pay off the mortgage and pay or put aside any taxes owed. Your closing agent will help you with all these details.

The closing phase is the busiest (and most exciting) time of selling your first property in real estate investing. The closing table is where all of your hard work pays off and you get to walk away with your real estate investing profits.

TIP #8

To earn maximum profits from your real estate investing you simply find owners who are highly motivated to sell (due to a change in their situation like divorce, death or job conditions), buy their property (preferably with other people's money), then sell at a higher price and keep the change. Often that change is $10,000, $20,000, $30,000...and more!

TIP #9

Life insurance policies are an asset that can often be used for other investments. Policyholders whose policies are gathering dust can sell them to withdraw funds, which can then be used as a down payment.

TIP #10

When you are selecting a real estate agent to represent you, be sure that they are willing to provide you with a detailed blue print on how they intend things to go from start to finish.

You and your prospective agent should discuss how they plan to inform others that your property is on the market. Will they post an ad on the Internet, include it in a particular flyer or circular?

It is OK to ask them how much time they plan to devote to your particular situation.

If you are looking to sell your property in a hurry or if you are on a schedule, a part time real estate agent just will not do.

Always be sure that details regarding fees and commissions are disclosed prior to any type of agreement, especially any contractual agreement they ask you to sign.

Additional real estate investing help. The trick in real estate investing is to satisfy the seller's needs and win the seller's trust. Then put together a deal that works for both parties. Write it up, sign it and reap the profits! You need not be a millionaire to do real estate investing, you simply need to be focused on a win-win scenario.