Having worked with a variety of investment properties over the past several
years, let me first say YES it is possible to make a nice living working with
investment properties. However, I've also met a lot of individuals who have
failed miserably at it. In fact I've seen so many failures; I don't even know
where to start in discussing them...
One of the biggest mistakes I've
seen people make is they spend time "researching" i.e. watching videos or
reading the internet, but they never seem to seek advice from ACTUAL investors
working in their local market. Buried near the bottom of the ABC article, it
mentioned you should have a "home inspector, contractor, realtor, tax accountant
and attorney to advise you."* Although I would add lender to that list as well,
the point to be made is having a core group of experts from every aspect of the
investment stage to help you should something go wrong can mean the difference
between making a profit and losing your proverbial shirt.
From my
experience, most would-be investors are afraid of looking “stupid” in front of
other investors, or are afraid they will be perceived as competition. Trust me;
successful investors do not see a first time neophyte as a threat. Most of you
will fail so there is no need for the expert to feel angst by the presence of a
novice. But believe me, it’s a whole lot less embarrassing to ask a stupid
question of an experienced expert than to lose your home because you didn’t ask
in the first place. And remember because laws and regulations vary from state to
state, and city to city, the “great advice” you get from someone on the internet
in California can land you in hot water in Missouri. For that matter, the
differences between an established inner city and a budding subburb can be night
and day.
The best advice, as well as the FIRST piece of advice I offer every “new” real
estate investor or would-be rehabber is to seek excellent tax and legal council.
When seeking advice of an accountant, research for a company or individual with
experience in real estate. When it comes to home improvements and rehabbing,
things like repairing a door verses replacing a door depreciate very differently
having varying tax consequences. A knowledgeable tax advisor can be your
greatest asset when Uncle Sam comes a callin'!
This is also true of your legal ally a.k.a. your attorney. Protect your current assets and minimize your exposure and vulnerability to liability should the unexpected occur- like someone becoming injured on your property, loss due to theft and possible items not covered under your insurance policy (that’s another story for another day- which I will post to my blog at
http://www.stlagent.com). Your attorney will guide you on an appropriate course of action be it in creating an LLC (Limited Liability Corporation) or other appropriate precautions to protect your best interests.
Along theses same lines, when you go to look for the rest of your core group of “experts” as you begin your endeavor into investment properties, seek out individuals who not only know their business, but have also owned investment properties themselves. For example, I run into residential real estate agents far too often than I care to reveal who are offering all sorts of bad advice to would-be investors because they are trying to find an investment property and don’t know the difference between an investment and a primary residence.
This is also true of your legal ally a.k.a. your attorney. Protect your current assets and minimize your exposure and vulnerability to liability should the unexpected occur- like someone becoming injured on your property, loss due to theft and possible items not covered under your insurance policy (that’s another story for another day- which I will post to my blog at
http://www.stlagent.com). Your attorney will guide you on an appropriate course of action be it in creating an LLC (Limited Liability Corporation) or other appropriate precautions to protect your best interests.
Along theses same lines, when you go to look for the rest of your core group of “experts” as you begin your endeavor into investment properties, seek out individuals who not only know their business, but have also owned investment properties themselves. For example, I run into residential real estate agents far too often than I care to reveal who are offering all sorts of bad advice to would-be investors because they are trying to find an investment property and don’t know the difference between an investment and a primary residence.
Not to beat my own drum, but my experience in these matters is first hand and
once you’ve worked with investment properties you will realize it’s not like
buying a home to live in. Think of it this way, a gynecologist is in fact a
doctor, but would you go to him/her if you had a sore throat? It’s no different
with real estate agents. Find an agent who has experience in investment
properties, first hand, because you seek investment properties in a completely
different approach than you do a home to live in (Again, another story, another
day). The same is true of lenders because borrowing money on an investment
property is extremely different than a primary residence- and finding out your
lender didn’t know that after the project starts can break you.
If you really want to enter the world of investment properties, be certain of your goals and stay within those narrow parameters. If you think investment properties will be “fun” and a “bonding” experience with your teenager because of too many hours spent in front of the T.V. watching “Trading Spaces”, think again. Investing in real estate should be approached like any other investment. If the numbers look good on paper, proceed. If not, put on your tennis shoes and run like heck!
If you really want to enter the world of investment properties, be certain of your goals and stay within those narrow parameters. If you think investment properties will be “fun” and a “bonding” experience with your teenager because of too many hours spent in front of the T.V. watching “Trading Spaces”, think again. Investing in real estate should be approached like any other investment. If the numbers look good on paper, proceed. If not, put on your tennis shoes and run like heck!
by Kimberly Shallenberger-Cameron
http://www.stlagent.com