Personal finance -http://www.fintotal.com Title : Do's and Don'ts of Real Estate Investment
Meta description: Tips for real estate investing
Snippet: When it comes to buying real estate, it's easy to get carried away with the 'searching' part. You spend lots of time looking at listings and kicking the tires. But don't overlook one of the most important parts of real estate investing... the negotiation process. The negotiation can really make or break you, as it will fix in stone the terms of purchase (and therefore your future financing costs as well). Consider these common negotiating Don'ts. DON'T: Be in a rush! The easiest way to make mistakes is to rush (or to allow yourself to be rushed by the other parties). Maybe you're eager to close the deal fast so that you can start watching the profits roll in. Maybe your real estate agent is pressuring you to buy so that he or she can collect a commission. Maybe the seller is trying to build a false sense of urgency in order to get a better deal! Regardless of the reason... stop, and slow down. Any deal you have to decide at THIS VERY MOMENT is in all likelihood a deal you should walk away from. If you are rush, you will likely cut corners in your due diligence, and you are likely to 'settle' for terms you would not normally prefer. A salesman always tries to create a sense of urgency. You, as a buyer, should refuse to accept that. DO: Take your time and get it right. DON'T: Fall in love with an investment property Fall in love with your husband/wife, your children, your car. But don't fall in love in business or investing. It's all about the money. Once you fall in 'love', it's no longer about the money, which puts you at a distinct to disadvantage if you're dealing with someone who has their investing head on straight. You must always be willing to walk away from the table. The moment you are not willing to walk away is the moment you become a prime target for a sharper investor. DO: Keep your head, and keep your focus on the numbers. Keep your emotions out of it. DON'T: Skip your homework Buying an investment property is the same as buying a business. The 'business' involves a lot more than the building or the land it sits on. You must also be concerned with a) the state of the market for the product you're selling (ie. apartment rentals), b) the past history of that particular business (ie. 5 owners in 5 years? Be suspicious), c) the neighborhood where your business is located (are you buying a castle in the middle of a slum?), d) what kind of financing you'll need, and how much it will cost you... The list goes on.
Most of all, you need to have a firm grasp on the numbers. Make a reasonable estimate of how much return you will be able to make in a given number of years. Make a list of the primary risks. How likely or unlikely are they? If you're still comfortable with all of these things, then you can make an educated decision on what the property is worth. You can feel good about paying what the property is worth, but should be willing to walk away above that price. This isn't fun. It's hard work, it takes some time and you may have to do some research. But you skip it at your own risk! DO: Perform all necessary due diligence. Run the numbers! Know the facts!
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