Ten Uncovered Real Estate Investing Secrets

TIP #1

If you can justify it, raising rents is the most obvious way to boost income on any rental property.

The simple way to justify raising rents is to see what similar units are renting for. If your units are below the going rate, you can raise the rents and still not lose your renters. When you increase the rent $60 for three apartments it means $2160 more net income annually. With a .08 cap rate, you just added $27,000 to the value of your property ($2160 / .08 = $27K).

TIP #2

There are many potential investors who realize real estate investing is the best way to accumulate wealth and venture into the purchase of properties without knowing the basics of real estate investing.

Investors like this are almost certain to get into financial trouble.

Learn the basics before you jump into your first deal. Consider working with a seasoned investor on your first few real estate investing deals. Take a mentor, attend classes and implement learning from books and tapes to follow in the footsteps of those that are already successful in their real estate investing ventures.

TIP #3

You can raise the rents on your rental property if you have a carport built. If you have a three-plex and your tenants agree to pay you $30 more per month, that is $1080 more net income annually, meaning roughly $13,500 more value added to your property.
($30 x 3 units x 12 months = $1080 divided by a .08 cap rate = $13,500)

If you can build a carport for $4,000 or even $5,000, that's a good return on investment right? Can you find out what other improvements the tenants want?

TIP #4

Do not fall in love with the first property you go out to see. Too many investors buy properties because they "look nice" or they begin "moving in" themselves.

Remember, you do not have to live there, it is a real estate deal. Part of making sound real estate investing transactions is in giving yourself a choice so you can select the best one, financially, so take your time and select the one that is right for you.

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

An alternative to real estate investing is paper investment, where an active real estate investor can supplement your portfolio or even make a full-time business in lieu of actual physical ownership of properties.

This offers the real estate investor a way to invest in real estate without the day-to-day logistical headaches of more traditional investing.

TIP #6

You can sell your property on your own and cut out expensive brokerage fees by following these three easy steps.

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. 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 #7

Mortgage note investors can earn substantial yields when the real estate investing market is challenged by steadily rising interest rates.

Those with prior experience as real estate investors can utilize their knowledge of property to choose sound, secure, credit-worthy investments. When the building that serves as collateral on the note has true value, the associated debt carries less risk.

Those investors who are accustomed to doing rehab on a property usually have an eye for what constitutes solid and problem-free construction and can provide a reasonably accurate estimate on any repair costs.

Utilize a team approach to maximize your profits as you learn more and contribute to your own bottom line.

TIP #8

When investing in real estate mortgages there are different rates of return, yields, timetables to maturity, and degrees of risk versus potential reward, as with any debt instrument. To learn more about investing in mortgage notes, contact a broker who specializes in them. They can explain how it works and how it may serve you as a practical alternative to rehab projects. Investing in real estate mortgages help you stay invested in real estate during both bull and bear markets.

TIP #9

Selling rental real estate isn't like selling houses you live in. You can paint any house and get a little more because it looks nicer.

Rental properties, especially larger ones, are different because they are bought by investors who look at income more than new paint or other cosmetic repairs. Look for ways to raise the income on these rental properties and you increase the value to investors which relates to more profit in your pocket at sale time.

There are several ways to increase the income on a rental property including raising rents, adding value to the tenants and facilitating repairs that lower energy costs.

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, you simply need to be focused on a win-win scenario.

Steve Majors - The Lazy Investor
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