When it comes to investing, everybody has certain goals and aspirations. However, we have found that there are certain guidelines every aspiring real estate investor needs to know:
1. Compare Property Values and Rents - Financial statistics only go so far; the best Measure of a property's market value is often the sale prices of nearby properties. The same holds true for area rents. A low price can often be justified by a reasonable rent; renter’s who can afford a high rent can afford to buy instead, so reasonably priced rent is a need.
2. Be careful – Alabama Tax laws change periodically. Don't base your tax investment on current tax laws. The tax code is constantly changing, and a good investment should be a good investment regardless of the tax code. The right property with the right financing is what you should look for as an investor.
3. Specialize in something you know - Start in a market segment you know. Whether your focus on fixer-uppers, foreclosures, starter homes, low-down payment properties, condominiums, or small apartment buildings, you’ll benefit from experience by specializing in one aspect of investment real estate properties.
4. Know the Costs going in! - Know the financial statements inside out. What does the cash flow statement look like? What are operating expenses? What are loan payments? Vacancy costs? Taxes? These are key issues that must be addressed before making a solid investment.
5. Know about your tenants and collect security deposits upfront.
6. Assess the tax situation - Taxes are an integral part of successful real estate investing, and they often make the difference between a positive cash flow and a negative one. Know the tax situation, and see how it can be manipulated to your advantage. It may be a good idea to consult a tax advisor.
7. Investigate insurance coverage - The beautiful Mobile Bay Area has seen quite a rise in insurance premiums since hurricane Katrina. This includes both Mobile and Baldwin County. If you cannot get insurance quotes before making the offer, put a contingency clause in the purchase agreement with a specified number of days to obtain acceptable insurance quotes.
8. Confirm Utility Costs - Ask the local utilities to verify recent utility expenses, especially if any of these costs are included in your tenant's rent.
9. Consult Your Accountant - Taxation is a key element of successful real estate investing, so be sure to find an accountant who is well-versed with the constantly evolving tax code.
10. Inspect! - Make sure that you always perform a thorough inspection of the property before buying it. Never, ever buy any property without at least examining the site. In some cases, hiring professional inspectors to examine the structural mechanical system may be a sound investment.
If you are looking for investment property in South Baldwin, North Baldwin, or Central Baldwin County including Spanish fort, Malbis, Daphne, Point Clear, Montrose, Silverhill, Robertsdale, Foley, Gulf Shores, Orange Beach, or Mobile County, give me a call today.
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