Property Investing – 7 Tips To Managing Your Risk
Real estate offers greater profit potential, compared to other forms of investment. Not every piece of land will always turn out to be a winner. Despite the great potential in profit, some cases are high risks. So you will want to be sure to carefully research and study your real estate investments.
Real Estate Agents. You will get better results if you take the time to interview several Real Estate professionals and ask them if they own any investment property themselves. If you are able to locate one of this professionals in your area, hold on to them. They will understand your needs and they will be invaluable helping achieve your objectives. Real estate agents can be an excellent source of undervalued investment properties. After they get to know you, they will search you every time that a good property hits their desk. They can also help you determine the market value of the potential property. Your Agent can provide you with a list of all the investment properties that meet your requirements.
The bottom line is–if you do not understand basic real estate terms like “short sale”, “wholesaling” and “wrap deal”, then you are at a serious disadvantage. Also if you don’t know how to negotiate with contractors, realtors, loan officers, sellers and even the government, then you are a statistic waiting to happen. However, I believe that the investors who make the mistakes noted above are still better than the investors who analyze and then analyze and then analyze without ever taking action. Mistakes will happen, that’s inevitable, but learn from them and that mistake becomes invaluable.
As the buyer, it’s your job to know the primary motives of the seller. Understand what he or she is aiming to accomplish by selling the property. If you can give the impression that you can help the seller achieve his or her goals, then the seller will be more accommodating when negotiating with you. And when you have the trust of the seller, it becomes much easier to come to reasonable terms. At the end of the day, it becomes a win-win for both you, the buyer, and the seller.
However, an investor is not guaranteed to get a good return by investing in real estate. Let’s look at the 2008 financial crisis. Some unfortunate investors purchased property just before the crisis hit. They probably observed the housing market and believed that prices would continue to increase. Unfortunately, most of them lost out.
If you put your money in stock in 2002 then you will be in loss today but in future you will get profit. The people who make an effort to spread their risks by putting a selection of their faith in actual estate investing can get success and save their money. Property prices have increased during the last 5yrs. For those who could buy owning a home trusts but not in the house directly, could gain profit. Put your money on property and you merely might find out that you just make 3 x equally as much off overlook than you should after investing 500 stocks. Investors are already falling over themselves to increase right of entry to this kind of property investing.
So even though you may not be able to achieve to goal of purchasing 130 properties in 3.5 years (that is one property every 9-10 days) it is very likely that you can start by purchasing one positive cash flow property with the goal of owning 13 properties in 35 years.
Non-recourse financing. As you borrow more money, it is easier to borrow. Once you begin borrowing as a minimum two million dollars, it becomes non-recourse financing and this means the asset is the sole security for the loan. No person is personally promising the loan.