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Have a Profitable Investment in Real Estate

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By : Sonia Smith    99 or more times read
Everybody wants to have a more profitable real estate investment. You are no exception, and most likely you want to make this investment as productive as possible. While there are plenty of ways to build wealth with investing in real estate, there are common techniques that will make your investment more productive and profitable. Here are twelve steps to a profitable real estate investment.

  1. When making a decision in buying or selling, keep emotions at bay. Remember that there is always another property that you can invest. Regardless of how wonderful a real estate investment deal may be, another one will surely come your way. In the world of real estate, the next deal is usually better than the one you missed.

  2. Create and nurture friendships because this is your mainstream to a successful investment. A good contact with an agent, bank or even a plumber will make your life a lot easier and more profitable. When looking for people who can help with your investment, you can start by finding a real estate agent who has experience in buying and selling properties for investment.

  3. As much as possible, avoid rental vacancies since this easily turn into a money-loser. Nevertheless, you should take into consideration an allowance for vacancies since however hard you try, at some point you will have to deal with vacancies in your rental property.

  4. Address tenant calls immediately. When a tenant calls to report a problem, act on it right away. This will accomplish several things more quickly. It also reduces the risk of the problem getting worst and this will also create a positive impact on the relationship between you and your tenants.

  5. Do an estimate of the rehab or repair expenses. This does not only mean identifying things that require repair or replacement, but also an estimate of the cost of the materials and the job. Like any other estimate, the rehab or repair cost comes with a certain range. It is important to give an allowance from ten to twenty percent for unexpected costs.

  6. In your real estate investment, maintenance costs are part of the whole thing. While they do not come at regular intervals, you should set aside a certain sum every month for these costs. You might suddenly be faced with the air conditioner or the roof needing repairs or replacement at the same time, so better to anticipate and prepare.

  7. In your rental agreement, include an automatic rent appreciation. By including this in your lease agreement, you will be able to avoid discussing this point every year. Tenants seldom object to a modest rent increase.

  8. Ensure you have capital available to expect the unexpected. Ideally, you should have ready cash in banks for emergency purposes. However, if you do not have cash, your credit cards will suffice just as long as you have something when the need arises.

  9. Invest in a property located in a good school district. If you purchase in a bad school areas, you may find it hard to rent out the home and additionally, it will have a lesser value and difficult to sell.

  10. Look for an experienced mentor who can guide and teach you when you start your investment. The things you will learn from such person will help you save on time and money and you will be able to learn more quickly. If there is no one in the business that you know, you can ask your real estate agent or you can join a real estate investment club in your area.

  11. In foreclosures investment, expect to find the HVAC and the water heater in a terrible condition or not working at all. Because a foreclosure allows a home to sit vacant for many months, expect this to take a toll on the home mechanicals and other systems.

  12. Get a good idea of the 1031 exchange. Tax-deferred exchanges offer a good opportunity to shelter your profits from the taxman. Just like depreciation, it is important to have a clearer understanding of the basics of the 1031, specifically if you intend to sell a property.
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