5 Hot Tips for Successful Real Estate Investment

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Rhiannon Williamson

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The recent downturn of the global stock market saw millions of 'every day' investors having their fingers badly burned. Overnight life savings were eaten away, retirement funds went into decline and the economic forecast for all of us who had any money invested in stocks and shares was gloomy to say the very least.

Real Estate Investment is a viable and low risk investment alternative for long term wealth. If it is done correctly that is!

As a direct result investors in their thousands turned their backs on the rollercoaster stock markets and sought alternative asset classes in which to invest their hard earned money. This has led to a global boom in real estate markets and property prices, and it has spawned a generation of budding real estate investors.
For those of you wondering whether it's too late to venture into real estate investing or considering how best to make the most significant returns from property investment, here are 5 hot tips for successful real estate investment to set you on the path to potential profits!

1) Consider Investment Property Abroad

There are many relatively untapped property markets in countries around the world that offer the real estate investor greater return on investment in the form of rental yields or short to medium term capital growth.
While major markets in the USA, UK, Australia and Europe are slowing down, there are emerging property markets globally that are hungry for investment and are proving to be highly profitable.
For example, in 2007 a number of countries are already aligned for accession into the European Union and as a result property markets in these countries are likely to benefit from greater numbers of visitors, more trade, increased investment into infrastructure and more stable economies. The likes of Hungary, Slovakia, Bulgaria, Croatia, Turkey and even Northern Cyprus are just a few examples of overseas destinations with emerging real estate markets that may be worthy of your consideration.

2) Make Sure Your Plans Are Profitable

This sounds ridiculously simple right? Well, you'd be surprised how few people actually make sure their plans are actually sustainable and as profitable as they hope.
Examine any real estate market that you're about to enter by firstly comparing property values across the city, state or region and making sure you know what your money will buy you. Then ensure that the rental yield you intend to obtain from your property is actually realistic or that the asking price you intend to set once you've renovated the property will be offered.

3) Never Assume Anything

This goes from assuming a house is structurally sound to accepting that tax laws won't change – from believing your tenants when they tell you that they are house proud and honest to accepting the first builder's quotation!
Do your due diligence on every single aspect of the process from ensuring the asking price for a property is fair to checking your tax returns before your accountant submits them for you. This is your investment, your future, your potential profit and therefore it is ultimately your responsibility.

4) Employ An Expert When In Doubt

Few people are a master of all trades therefore be prepared to acknowledge areas where you are far from being an expert and at least consider courting a second opinion. Again, this goes from checking out the structural soundness of a property to understanding the legal ramifications of letting out your property. If in doubt always double check - and if this means you have to call in an expert, make sure you call in an expert!

5) Set A Realistic Budget And Stick To It

Whether you're purchasing property to let out or buying real estate to renovate you need to sit down and add up every single area of projected expenditure to enable you to set a realistic budget with which to work.
Make sure you add in everything from having searches and surveys conducted, legal fees, accountancy fees, insurance costs, likely interest payments on any finance required, taxation, connection of utilities, marketing for tenants or buyers, real estate agency fees, and of course don't forget to add on the cost of the property and the price of any renovation and refurnishing and decorating work required.
Spend time considering every single area where a cost will be incurred and detail every likely payment that will have to be made and you will arm yourself with a bullet proof budget and do all you can to ensure you encounter no nasty surprises along the way.

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About the author: Rhiannon Williamson

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Rhiannon Williamson is an offshore investment, overseas living and international property expert and publisher of http://www.shelteroffshore.com/.

For investment property abroad news and property buying guides, visit www.ShelterOffshore.com

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Go from 5 Hot Tips for Successful Real Estate Investment To The Real Estate Investment Methods Page Or Go To Freedom Steps With Property Investing

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Property Selection - The Vital Component in Your Investing Tool Kit

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Property Selection is
The Vital Component in
Your Investing Tool Kit

Property selection, Choosing the right type of property and the right location for your investment properties will make an enormous difference to your ongoing success.

This can make a huge difference...

Here is a example of just how much difference effective selection can make.

Let's say that you were considering two properties of similar size and features. Both were townhouses with two bedrooms, two bathrooms and a one car garage.

However Property A is new, the purchase price is $330,000 and it will rent for only $280, giving you a rental return of 4.4%. ($280 times 52weeks divided by $330,000 as a percentage.)

The Ideal Type of Investment Property

The ideal type of investment property has these characteristics:

1. Buy new investment property
   
2. Priced at the median price for the area
   
3. Is in demand with tenants
   
4. Has potential for future growth
   

Buy new investment property

There are a number of good reasons to focus your purchasing of investment properties on new properties.

• Higher depreciation allowance to deduct from your tax bill.
  
• Lower maintenance cost and therefore lower overall cost of ownership.
  

Median Priced Property

Buy property that is priced at or near the median price for the area.

The reason for this is simple. The property you want to offer for rental, especially when you are just starting out, is property that is closest to the most in demand type of property in any area.

This will ensure two things, that you always have a supply of ready and willing tenants to rent your property. (This is a very important part of your investment property business.)

Secondly, if your unit or townhouse is in demand then the value of your investment property will rise. This is perhaps the most important part of your investment business.

We've only covered two reasons so far.

Read on to discover why it is so important for you to become knowledgeable at effective property selection.

Buy a Property that is in Demand with Tenants

We have already touched on the importance of this above. Here are some other considerations to take into account.

A property in a better area will attract a better type of tenant and that will ultimately lead to less problems both with property maintenance and perhaps even collection of rent due and avoiding a default on rent.

Generally well located median priced property will prove to be your best bet for long term capital growth and rentability. After all the real money to be made in real estate is not by buying a property and reselling it a short time later for a small profit.

No the the real money to be made in property is to buy and hold as many well selected pieces of investment real estate as you can for as long as you can. In fact if you maintain a philosophy of just not selling this will in time provide you with a continually growing rent stream as well as a rapidly increasing equity base.

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Return From Property Selection To Freedom Steps With Property Investing

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How To Estimate Property Value Accurately!

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How To Estimate Property Value s Accurately!

By learning how to Estimate Property Value accurately you can save your self a lot of money by not overpaying when you buy!

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By Rick Saroukhanian

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As an Certified Appraiser I can tell you that the most common mistake that many beginning real estate investors make is that they pay too much for property. Fact is overpaying for property is often cited as the number one reason why so many newcomers fail to make it as profitable real estate investors.

By not being able to accurately estimate property value they are doing themselves a serious injustice.

That’s because most beginning real estate investors are woefully under capitalized, and they don’t have the deep pockets that are needed to subsidize their overpriced real estate investments.

For many neophyte investors, paying too much for their first investment property usually proves to be a very costly and fatal mistake, and marks the beginning of the end of their foray into real estate. That’s why it’s imperative that you learn how to accurately estimate the current market value of potential investment properties! As far as I’m concerned, it’s the single most important aspect of the entire real estate investment business!

A Fast $50,000 Profit for Knowing the Value of a Condemned House

I once bought a real estate option on a filthy, neglected, run-down, but structurally sound house in a neighborhood-in-transition within Los Angeles, California, that had been condemned for building, safety, health and fire code violations. This place looked like something right out of downtown Baghdad, Iraq! It had what code enforcement inspectors commonly refer to as accumulations of every type of debris, garbage and junk known to mankind! The property’s owner lived in Westerville, Ohio, and wanted the steady stream of threatening letters from the Winter Park Code Enforcement Board to stop.

I had done my homework, and knew the property was worth at least $450,000 after it was cleaned up. I ended up paying $2500 for a six month option to purchase the house for $365,000. It cost me $10,000 to have all of the accumulations removed from the property, and the house, driveway and walkways pressure washed. Three weeks later, I sold my real estate option agreement for a $65,000 profit! This never would have happened if I had been clueless about how to estimate property values. Since I had an accurate estimate as to how much the property was worth in its current condition, I was able to negotiate a below market purchase price that was based on the property’s filthy, neglected, run-down non-marketable condition, and not on how much it might have been worth after it had been cleaned up.

How was I able to quicky estimate the value of this property?

No Kelly Blue Book for Real Estate Investors to Look Up Property Values

Sadly, there’s no Kelly Blue Book equivalent for real estate investors to lookup used property prices in, so you’re going to have to learn for yourself how to estimate the current market value of potential investment properties. However, thanks to computers and the Internet, in most real estate markets it’s not that difficult to get a rough estimate of a property’s current market value. This is especially true for real estate investors located in counties where all property ownership, sale and tax assessment records are available online.

The Definition of Market Value

The Appraisal Foundation’s Uniform Standards of Professional Appraisal Practice, defines market value as: “The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the sale price isn’t affected by undue stimulus.”

The Difference Between Assessed Value and Appraised Value

The difference between a property’s tax-assessed value and its appraised value is as follows:

1. Tax Assessed Value: Tax-assessed value is the value established by the local taxing authority for a parcel of land and the improvements placed upon the land for property tax purposes. For example, in Florida, owner-occupied single-family houses are generally assessed at around seventy percent of their fair market value by county property appraisers.

2. Appraised Value: Appraised value is the value estimate given to a property by a licensed property appraiser using accepted appraisal methods for the type of property being appraised. For example, the accepted appraisal method to accurately estimate the fair market value for an owner-occupied single-family house is the comparison sales method where a property’s value is based on the recent sale of comparable properties within the same area.

The Three Common Methods Used to Estimate Property Values

The three most common methods used by property appraisers to estimate property values are the:

Comparison Sales Method:

The comparison sales method bases a property’s value on the recent sale prices of properties that are within the same area and comparable in size, quality, amenities and features.

Income Method:

The Income Method is used to estimate the value of an income producing property based on the net income the property produces.

Replacement Cost Method:

The replacement cost method is based on what it would cost to replace the improvements on property using similar construction materials and construction methods.

The Comparison Sales Method of Estimating a Property’s Value

The comparison sales method of estimating a property’s value is based on the recent sale prices of properties within the same area that are comparable in size, amenities and features. In order to be accurate, sale price adjustments must be made for comparable properties that have been sold at unrealistically low prices or on overly favorable financial terms not readily available to the buying public.

The Income Method of Estimating a Property’s Value

The income method is used to estimate the value of an income producing property based on the net income the property produces. Under the income method value is calculated using a:

1. Capitalization Rate

The capitalization rate, or cap rate, is calculated by dividing a property’s annual net operating income by its purchase price.

2. Gross Rent Multiplier

The gross rent multiplier, or GRM, is calculated by dividing the purchase price by the property’s monthly gross operating income.

Watch Out for Owners Using Fuzzy Math

A word to the wise: when you read a property’s income and expense statement, you should always go under the assumption that the owner is probably practicing fuzzy math by fudging on the numbers, and telling little white lies to back them up. Also, use a monthly income and expense analysis worksheet like the sample copy below, to cross-check everything that’s listed on a property’s income and expense statement in order to reconcile the statement with receipts and tax returns against what’s shown on:

1. Schedule E (Supplemental Income and Loss) of the owner’s latest federal income tax return.
   
   
2. The property’s latest annual tax assessment income and expense statement on file at the county property appraiser or assessor’s office.
   
   
3. All of the rental agreements for the past year.
   
   
4. Utilities Statements - Water, sewage, solid waste, gas and electric bills for the past year.
   
   
5. Repair and capital improvement bills for the past year.

The Replacement Cost Method of Estimating a Property’s Value

The replacement cost method of estimating a property’s value is based on the cost of replacing the improvements on the property minus the cost of the land to estimate a property’s value. Replacement costs are calculated on a per square foot basis by dividing the total number of square feet in the building by the per square foot construction cost. For example, a two thousand square foot convenience store that cost $375,000 to build would have a replacement cost of $187.50 per square foot, $375,000 divided by 2000.

How to Get Free Building Replacement Cost Estimates

You can usually get a free building replacement cost estimate by calling a local independent insurance broker who represents insurers that specialize in providing property and casualty insurance coverage for residential and commercial buildings. When you call a broker, tell them that you want a replacement cost quote. Property replacement costs are calculated by using a replacement cost formula that’s based on the property’s geographical location and its:

1. Street address.
   
2. Age.
   
3. Type of construction.
   
4. Number of stories.
   
5. Type of roof.
   
6. Current use.
   
7. Heating and cooling system.
   
8. Square footage.

Use the Eight-Step Approach to Estimate a Property’s Current Market Value

Use the following eight-step approach and the current value worksheet on the following page to get a rough estimate of a potential investment property’s current market value:

Step # 1:

Log onto your county’s property appraiser or assessor’s Web site to obtain the tax assessed value of the property under consideration.

Step # 2:

Search your county’s property tax rolls for recent sales of three to five properties that are comparable in size, amenities and features, and located within two miles of the property under consideration.

Step # 3:

Carefully analyze any comparable properties that you find, and make sale price adjustments for differences in amenities, special features and the property’s physical condition.

Step # 4:

Verify the income and expenses that are listed on the income and expense statement of the property under consideration.

Step # 5:

Analyze the property’s income and expenses for the past twelve months to estimate its net operating income potential.

Step # 6:

Calculate the property’s capitalization rate by dividing its potential operating income by the estimated value that you derived from analyzing recent sales of comparable properties in step number three.

Step #7:

Estimate the property’s value by multiplying its net operating income by the capitalization rate you came up with for the property.

Step # 8:

Calculate the cost of replacing the improvements on the property using the same building materials and method of construction.

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Rick Sarouk is an active nationwide real estate investor and certified appraiser. He has been investing in foreclosure and preforeclosure real estate for the past 18 years. for more information go to http://www.RealEstateInvestorsLife.com for everyday investor resources

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Article Source: http://EzineArticles.com/?expert=Rick_Saroukhanian
http://EzineArticles.com/?How-To-Estimate-and-Determine-A-Propertys-Value-Accurately!&id=772573

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Why Property Investing?

Three Good Reasons to Invest in Property

Plus others you may never have considered

Many future investors ask why property investing is better than any other type of investing. Here I will give you a brief rundown as to the advantages of property investing over other forms of investing.

I'm sure you have heard about all the beat up about using investiment property to create instant wealth. But the truth is that is just not true. Successfully investing in property needs a different mind set. The change in mindset required is a change from a trader mentality to that of an asset holder.

A Trader is always looking to buy something at a lower price than he can sell it for.

There are three very good reasons for you to invest in property and they are:

The Multiplier Effect

This is the best reason. Property always trends upwards. If you buy a real estate investment propertty today, in 7 to 10 years (or even shorter) it will double in value! Stick with me and I will show you how to hold it and aquire more to grow your wealth faster.

Ready Access to Cash

Yes this is true and one of the little realised secrets of the truly wealthy. They do NOT sell as soon as it goes up in value, rather they use the increased value to borrow more money.

Property is Great Security

This is the basis for the whole philosophy behind property investing. this is the reason why banks will lend so much against real estate investments as opposed to any other form of investment. It just is plain and simply is the best form of security, even in the light of recent market fluctuations. But more on that later.

These are the three best reasons as to why property investing is still a great investment and here are some more.

• Property prices Trend Upwards.
  There are records going back for many years that show every property has doubled every 7 to 10 years. To verify this for yourself, just go the local department of records and examine the prices of properties for the last 50 or 100 years. You will see that each seven years a properties value is almost exactly double that of 7 years ago.
  Yes it's true there are exceptions to this. In some areas prices go up faster and in some areas prices will hardly seem to rise at all with time. but well located property, as I will help you to identify, will inevitably rise in value.
• Peace of Mind Investing
  The main reason why property investing is "Peace of mind investing" - you dont have to follow the markets and make daily, weekly or monthly adjustments.
  
• Property Investing is Very Tax Effective
  Another reason why property investing is so great are that the costs of owning a real estate investment can be deducted from your taxable income. (You will need to check your particular circumstances in your particular jurisdiction.)
• Risk and Reward
  The approach I advocate in these pages of taking a long term holding position with regard to your property portfolio
• Multiplier Effect
  A Comparison of Growth Potential
• Liquidity
  What if I need money quickly? This is a question often asked by people who are trying to come to grips with the idea of balancing several million dollars of growing equity against a diminishing debt.
  The answer lies in managing your credit. That is every year or so as your property values increase have them revalued and arrainge for a corresponding increase in your lines of credit from your banks. for my wife and I this happens automatically each year or so as we purchase new properties.

Do some of these reasons surprise you?

On other pages I'll go through these in more detail so you can see the analysis and support behind them.

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Lenders Mortgage Insurance
The Secret that
Professional Investors Use

You may have already discovered lenders mortgage insurance (LMI).

Perhaps a loan officer mentioned it in passing during your borrowing capacity assessment interview.

You should always have your finance capacity assessed prior to looking for property. This will do several things for you when looking and evaluating properties.

1. Firstly it will help you to home in on the right property type and price range of property to look at and avoid wasting your time.
   


2. Secondly when you do find a property that fits your property investment criteria
   then you are in a more powerful position. Both in terms of bargaining for the price you will pay negotiiating the terms that suit you best.

Lenders Mortgage Insurance is a Tool

Do not view LMI as an expense to be avoided.

LMI is a very useful tool that will improve your real rate of return or return on equity invested. I will outline the way that this works below.

Because you can borrow more, with your existing financial resources, LMI will also help you progress faster toward acheiving the property investing nirvana that you are seeking. Whether that be total financial independance, extra money to give to the worthy cause of your choice or the knowledge that you have total financial security.

For now just say that if you want to buy a property worth $100,000 then the bank would normally ask you to come up with $20,000 for the deposit. Which is a standard requirement of many banks.

This is where lenders mortgage insurance (LMI) comes into play. Using LMI you can reduce the amount required for the deposit to as low as 5 percent, perhaps less, depending on your financial institution.

LMI is Your Greatest Ally

Many new investors see a request from the bank to use of lenders mortgage insurance as an added expense. An additional cost barrier imposed by the banks to stop you from acheiving your investment goals.

Do not look at it this way. LMI is your friend. Professional investors (this means people like you) see the use of LMI as their greatest ally when it comes to obtaining the finance they need.

As I will show you below LMI is a very useful tool for real estate investors

LMI is a Capitalizable Expense

The great thing about using lenders mortgage insurance is that you can generally add the amount that LMI will cost you on to the amount being financed.

Why is this so beneficial to you?

Because it saves you using your precious available capital or equity. This can make an substantialf difference when you want to move on to your next investment property.

Is LMI a Tax Deduction

Lenders mortgage insurance can be viewed as a cost of doing business.

As such it can be deducted from your gross income when it comes to tax time.*

Your gross income is the rental income from your investment property and any other income you may have to declare in a tax year.

LMI Improves Your Return on Equity Invested

Quite simply put lenders mortgage insurance will improve your return on equity invested by allowing you to invest less equity in each property you buy.

So from the example above, using the standard requirement of the need for a 20% deposit with a $100,000 property. This would give a loan to value ratio of 80% and then your capital requirement would be $20,000. ($100,000 x 20%).

If the value of your property were to go up by 10% in one year to be valued at $110,000 then your net increase would be $10,000.

This equates to a 50% return on equity invested. ($10,000 / $20,000 x 100)

If by the use of lenders mortgage insurance you were able to reduce the deposit requirement ot 5% or $5,000 ($100,000 x 5%) and your property rose in value by the same 10% then ou would have a 200% return on equity invested. ($10,000 / $5,000 x 100) of 80%.

If you had $20,000 to invest you may think great, I'll just pay my $20,000 deposit and get my investment property. But if you used LMI you could lower the capital requirement to just $5,000.

In this case you culd then afford to purchase 4 properties instead of just your original one.

What's an LVR?

For a more detailed explanation see the loan to value retio page here.

For now it is enough to say that banks use your loan to value ratio (LVR) to calculate the level of debt (risk from the banks point of view) that they would be acceptable for a particular asset.

Some banks and financial institutions are more strict on this criteria than others, especially in the light of the sub-prime mortgage crisis that has caused a stir with less than optimally financed properties.

However that will not be you. You are aiming to obtain premium quality financing at terms favourable to you, not the banks.

And this is very acheivable, thousands of people have done it before you and millions more will do it in the future.

The Benefits of LMI - A Summary

In summary, lenders mortgage insurance can reduce your capital outlay requirements, enable you to progress faster with your property investment ambitions and improve your return on investment for any property.

Quick Links:

• Lenders Mortgage Insurance
  
• Borrowing Capacity Assessment
  
• Property Investment Criteria


• Loan to Value Ratio

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You Need a Real Estate
Investment Guide

Here is a real estate investment guide that out lines various ways that you may not have thought of to get started in the profitable field of property investing.

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Jeanette J. Fisher

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Get Started Investing In Real Estate

You can start where you are right now and build wealth one property at a time.


You can build and reap the huge rewards available.
You need to begin with a plan.

Here are some ways to get started investingin real estate. Choose a plan that works for you.

If you don't currently own your own home, that's the best placeto start. Many people never buy a home because they think theyhave to have perfect credit or a lot of money down. Talk to amortgage loan officer. You may be surprised that you can buy ahome with little money down.

If You are a Homeowner You Are a Real Estate Investor

Whether home owners want to stay in their home for life or justa few years, their home should make them money. Many familiesonly own one home at a time, but they keep moving up. Some ofthese families have made money from their homes by taking outthe equity to pay bills.

Other families bought more expensivehomes, which went up in value more than the first home. Forinstance, a family bought a home for $105,000, sold the home for$230,000 and then bought a home for $300,000. The more expensivehome went up in value the next year more than the first home.You can build your real estate wealth just by owning one home.

However, if you split your mortgage payments with other people,you don't have to pay for all this equity on your own. Yourtenants will help you make the payments and over time canactually buy the property for you!

How to Begin Real Estate Investing

Many investors start with a home to live in and then save moneyfor a down payment for their first investment property. Here aresome ways to skip the savings years, which most people neveraccomplish:

1. Refinance. - If your home has gone up in value, refinance your home and use the equity for a down payment on an investment house. You must have sufficient monthly income to pay any negative between the rental income and the new mortgage payment. Some home owners have been able to purchase more than oneinvestment house from one refinance transaction.

2. Move - Another way beginning real estate investors get theirfirst investment is to buy a new home and rent out their firsthome. If you have great credit, you don't need to put a downpayment into a new home to live in.

3. Sell and Move - You can sell your home and buy two houses. Useyour equity to put more down on the investment house than yourpersonal home.

4. Buy a vacation or second home - Our cabin tripled in value inthree years. We refinanced the cabin to buy more houses and alsokept funds to pay for the mortgage, twice. The cabin pays us toenjoy it!

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About the author: Jeanette Fisher

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Jeanette Fisher teaches how to find, finance, fix and sell. Free ebooks - Jeanette Fisher

See Jeanette's sites -
Credit Tips

OR
Flipping Houses

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Tips For Flipping Real Estate

7 Simple Tips For Flipping Real Estate

Heather Seitz

Here are 7 simple tips for flipping houses and real estate.

Unless you've been living under a rock for the past few years, you've probably either dabbled in real estate yourself, or at the very least, know someone who has. So, how does someone that's brand new to real estate start flipping homes? (And let's clear the air right now... IT IS NOT TOO LATE to start investing in real estate).

Follow these 7 tips to start investing in real estate today:

1 - Look In Your Own Backyard

The grass is always greener in the other neighborhood, and it's easy to keep looking for the "right" area. The bottom line is that any area is the "right" area. In order to be effective in the steps 2 through 7, you've got to get over the idea that real estate deals only exist in other areas. It sounds cliché, but there are plenty of deals in your own backyard. Not to mention, it's easier to manage and you're likely to know the values in and around your area.

2 - Find the "Right" Property

Not every piece of real estate is a good investment - even if you can "steal" it! Make sure you look at things like: * Property Location - Will you be able to sell the property once you've renovated it? * Condition - How much work- and what kind of work - needs to be done and is it a project that you can afford to take on financially and from a management perspective? * Seller's motivation - Is the seller truly motivated enough to negotiate on price?

3 - Have A Thorough Inspection

Unless you've been flipping real estate for a while or have a background in construction, then it's a good idea to have a full home inspection. It may cost you a few hundred dollars, but will catch things that maybe you didn't know to look for. When flipping real estate, it's the "little" things that add up very quickly and can eat up your profits!

*** Bonus Tip*** Use a home inspection to help renegotiate the purchase price OR ask for a credit toward repairs.

4 - Don't Get Emotional

Real Estate is emotional by nature. Investing in real estate cannot involve your emotions. It's got to be all business. If the numbers don't work, move on to the next. So many times, people are so desperate to flip their first deal that they make bad decisions just to do something at all. Then, they've become so attached to the deal that they try to sell it for higher than the market will bear and end up holding the property longer, reducing their profit and getting left with a bad taste in their mouth.

5 - Know Your Numbers

All of Them! Late night infomercials will hype you up with pipe dreams of flipping real estate for millions of dollars in profits and no work. You've seen the testimonials that go something like: "Mary Smith purchased this property for $100,000. It cost $10,000 in repairs. She flipped the property for $140,000 and made $30,000". Somewhere on the screen, you see in teeny tiny print: Results Not Typical. Your Results May Vary!

Of course results are not typical because those results assume that you buy the property for all cash and pay no closing fees and have no monthly costs. Be VERY cautious of deals that you see that sound like that!

In the real world, costs associated with flipping real estate are:

• Purchase costs: Upfront mortgage fees, attorneys fees, regular closings fees, title, survey, etc.
• Carrying costs: It's more than just the repairs! When you're flipping real estate, you're likely paying higher interest rates than on, let's say, a primary residence or second home. In addition to the repairs, you've got to consider monthly payments, taxes, insurance, utilities, etc.
• Selling costs: Again, you've got closing costs and possibly real estate commissions to consider.

Whether you're flipping a real estate deal here and there or you're looking to make real estate your new career, it's important that you know - and figure - your costs into your calculations. Keeping this in mind will help you keep from getting emotional (See Tip 4)

6 - Keep Track Of Your Progress

You can't improve what you can't measure! Throughout the entire project, you'll want to constantly track your progress. This way, you'll know, at any given time, where you stand on the deal. This will help keep you focused by keeping the bottom line in front of you all the time.

7 - Expect the Unexpected

In virtually every single property you flip, you will run across SOMETHING that you simply didn't expect. Whether it's an issue that pops up 2 hours before closing that needs to be handled or a big surprise when you peek behind the drywall that you had to replace! You'll almost always run at least a little over budget or hold it a little longer than you anticipated. But at the end of the day, you'll have the satisfaction of taken an ugly house and turned it around and depositing a healthy check in your bank account.

Recommended Resources:
Finding Deals: www.motivatedsellermarketing.com
Estimating Repairs: www.fixingandflipping.com
Finding Contractors: www.servicemagic.com

About the author: Heather Seitz

Heather makes it easy to get to the bottom line.


Learn how to evaluate a real estate deal in less than 15 minutes. Get your FREE video on flipping real estate and uncover the top 5 secrets that you need to know to double your profits on every single deal.

Get your free video and 5-part mini course at www.fixingandflipping.com

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Related Pages

Flipping Real Estate | Make Money Flipping Property | Flipping Real Estate Contracts | 7 Tips for Flipping Real Estate | Calculating Costs & Profits when Flipping Real Estate | The Risks Involved in Flipping Real Estate | Wholesale Real Estate Investing | The End Of The Real Estate Bubble - Is It As Bad As They Say?

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Risks Flipping Property

Image by Thomas Hawk via Flickr

The Risks Flipping Property

Flipping Real Estate Can be Risky Business

Mike Colpitts

Is Flipping Property the Road to Quick Riches

The art of flipping property may seem like the road to quick riches, but it's anything other than that for the majority of investors. Only a small percentage of people who buy real estate to flip it actually make a quick profit, according to a new survey.

Flipping property is the business of buying real estate, making repairs to it or playing a rapidly appreciating real estate market to make a quick profit.

Even The Best Laid Plans...

Flipping real estate may be part art, part business. But in a survey of 500 of the Nation's wealthiest real estate investors only 10.4% made a profit. The survey was conducted by Real Estate Add, an information driven real estate website.

Nearly half of all investors surveyed ended up holding on to their property for more than a year after the original purchase. Some 52% said they broke even and had to hold on to the property for much longer than they originally intended. The remaining nearly 38% suffered a loss.

Here Is An Example Of What Can Go Wrong Rick and Mary Coughlin of Santa Rosa, California purchased a 3-bedroom, two-bath home, which needed repairs. The Coughlins went about getting contractors estimates for the work before purchasing the home. Estimates ranged from $18,000 to $31,000. The Coughlins purchased the home, which was built in the mid-1970's, budgeting $40,000 for the work with the idea that they would do a lot of the repairs themselves. However, they encountered problems when they opened up one of the bathroom floors to find dry-rot that far exceeded their expectations. The couple did most of the work to the home themselves, but still retained a contractor to do some of the repairs, including the bathroom, kitchen floor, kitchen counters and replacing a wall in the livingroom. "We had made pretty good money flipping property up until that home," said Rick. "But the profits on five other homes were going down the drain on this one. It took us five months and three contractors to get the job done, and then by the time we sold it the place was eating us alive." The Coughlins had a mortgage with taxes and insurance on the home of nearly $2,900 a month. Mary would paint the inside evenings after work. Rick spent evenings and mornings at the place between work hours. The stress of turning a profit on the home seemed near impossible. The Coughlins were successful flipping five homes before this one, making nearly $300,000 in profit over three years. But this home turned into a nightmare. One of the bedroom floors caved in when Mary was moving furniture and had to be replaced by a contractor at a cost of $17,423.00, including walls that needed to be replaced as a result of damage to the room. The bathroom turned into a $21,000.00 project and the Coughlin's luck seemed to have run out. Including contractors fees and building supplies, the Coughlins spent $107,000. Once they sold the house seven months after buying it in a hot California real estate market the Coughlin's were pleased to be free of the mortgage. After all expenses and payments the Coughlins figure they were lucky, spending $131.000.00. This was their sixth flip so they had experienced success before and they were banking on these funds to help pay off a second mortgage on their primary residence. Instead, the Coughlins suffered a loss of nearly $90,000. The home sold for $624,000. Nearly a year after the sale on the home, Rick said that was his last flip. "You don't realize how risky it is until you hit the wrong house," he said. "We were lucky to sell that place." The Coughlins are typical of real estate investors who take the risk to quick riches. Rick and his wife have since bought a rental home they intend to hold on to for at least 10 years to make a substantial long term profit. Overtime pay has helped them to pay-off the second on their principal residence. Rick's best advice to others considering a flip is to purchase property in an area where the prices are lower and hold on till the value rises.

About the author: Mike Colpitts

Mike is the Publisher of Real Estate Add.com, an information driven website providing the latest market conditions on real estate markets in all 50 states, where you can also search for your next home.

Visit www.RealEstateAdd.com

Related Pages

Flipping Real Estate | Make Money Flipping Property | 7 Tips for Flipping Real Estate | Calculating Costs & Profits when Flipping Real Estate | The Risks Involved in Flipping Real Estate | Quick Cash Flipping Real Estate

Real Estate Investment Software - Helps Simplify your Real Estate Investing Decisions

Image by karllong via Flickr

Real Estate Investment Software

Helps Simplify your Real Estate Investing Decisions

Real estate investment software can be very useful to help you in two basic areas of your investing activities:

1. Making decisions as to whether or not to invest in a particular piece of real estate.
   
2. Real estate software can also help you after making a property purchase by helping you track and manage your property investment(s).

DISCOVER AND ANALYSE - real-estate-analysis-software.html

the various financial aspects of the property. useful software exists to help you construct an APOD or
Annual Property Operating Data sheet

to give you a quick evaluation of property performance for the first year of ownership, project future cash flow performance with
a cash flow proforma

or
analyse the the property using Net Present Value

(NPV) to consider the time value of money.

However none of these pieces of real estate investment software can remove or replace the need for you to make the final decision based on your personal goals and circumstances.

Real estate investment analysis software and Free Real estate investment analysis software helps you in making the decision whether or not to buy a particular property.

Real estate investment management software which helps you keep track of the profitability of any particular property as well as manage the day to day issues such as maintenance, collection of rent payments, and other issues.

There are various types of software and websites available on sites like Yahoo, to integrated software with many functions.

Real estate investment software can be basically divided into two tpypes.

Real estate investment analysis software which helps you in making the decision whether or not to buy a particular property.

Real estate investment management software which helps you keep track of the profitability of any particular property as well as manage the day to day issues such as maintenance, collection of rent payments, and other issues.

There are various types of property investment software packages ranging from free real estate investment software available on sites like Yahoo, to integrated software with many functions.
Related pages you might like to explore are:

1. Real Estate Investment Calculators
2. Free Real Estate Analysis Software
3. Free Real Estate Investment Software
4. Free Real Estate Investment Software
5. Real Estate Investment Property Analysis Software

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Return From Real Estate Investment Software To Real Estate Investment Selection Methods  Or go to Freedom Steps With Property Investing

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