The real
estate investment has provided many investors with positive cash flow, tax
benefits and satisfaction of making an:investment in a tangible asset.
However, like in any other investment, there are many intricacies and trends in
the market that need to be understood for peaceful possession and enjoyment of
the property. There are a large number of investors who invest their hard
earned money without a thorough examination of the documents and the credibility of the vendor and thereby land themselves into problems after their investment.
Therefore, it is necessary to take some precautions before investment.
Investment
in property carries with it a great potential for creating wealth and it
requires taking some potentially difficult decisions.Reinvestment in the
property and time management all needs careful consideration.
Property
investments can be the shining lights in your personal or business financial
portfolio. Most of successful investors have free and clear properties. You
should aim to reduce your debt as soon as you can by re-investing your cash
back into your property mortgage payments which in turn raises your net worth.
Do your homework. Don't do anything alone. Work with professionals or proven
successful investors to avoid finding yourself in damage control.
By aligning
yourself with the right professional you can avoid the likely common mistakes
so that you can ensure an excellent return on your investment.Cash flow,capital appreciation, tax benefits, and pride of ownership are just some of the
things that need to be addressed before you make an investment.
An
experienced real estate professional will render very useful service in
evaluating your needs and in suggesting you suitably. Make sure that you have
the right agent. Predicting constant appreciation in the value of the property
is extremely difficult if not impossible for the unseasoned investor.Property
which eats away cash every month can drain your working capital.This can
create stress, frustration and become quite painful. A strain on your cash flow
may cause you to sell the investment before the benefits of ownership are ever
realized.
Check
everything concerning the property under consideration devolution history,
rents, payment of taxes, expenses, deposits etc. Ask the tenants about pest
problems, structural damage or recurring problems. Don't overlook anything.
When investing your hard earned money be sure and use sound business judgment.Protect yourself against the risks that come with investment property.Take insurance cover for your property.The list of documents to be examined and the
statutory requirements to be fulfilled can be very many.They may include
obtaining Building permits, adherence of zoning laws, building bye-laws,
examination of rental and lease deeds, if any, examination of loan documents,
scrutiny of title deeds, etc.
If you are not trained to look into these
documents yourself then it is essential to engage a qualified professional to
approve all of these for you and only then you may conclude the deal. But
whatever it may be don't attempt to do it alone.
Do
comprehensive background checks on any prospective tenants. Previous landlords,
employers, financial references, credit and judgments are all extremely
important.If there are any questions do thorough research. Drive by their
previous residence. A little work upfront can save tremendous problems later.
Charge fair
rents, treat your tenants with respect and respond as quickly as possible to
their needs. It's a lot less costly in the long run to take care of the little
problems before they become big problems. Get letters from tenants confirming
the status of tenancy.Make sure
their version of the rental or lease agreement corresponds with the sellers interpretation.
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