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Dave Wallace,
Broker Associate
2542 E. Main Street
Ventura, Ca 93003
Direct: 805-207-5131
Office: 805-643-1234
Cell: 805-207-5131
Fax: 805-643-3338
Email
DRE: 00922339
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10 Proven Secrets to Real Estate Success
There are nearly as many investment-hunting strategies as there are investors. Yet experience provides some universal truths that pay off.
1. Compare Comparables
Fast and loose rules of thumb to estimate value, such as 6 or 8 times annual gross rent or 10 times net operating income to 100 times monthly rent, may not reflect an area's values. Use comparable sale prices of nearby properties to get the truest sense of market value. Do the same for area rents. A low price can be supported by a reasonable rent; remember, renters who can afford a high rent can afford to buy instead.
2. Tax Laws Change
A good investment is a good investment before it's a good tax shelter. Tax laws change. The right property in the right place with the right financing and management will weather inevitable tax code changes.
3. Specialize
Start in a market segment you know. Whether you 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. Run the Numbers
Operating expenses from repairs and maintenance, loan payments, taxes, vacancy costs and more will determine the difference between smooth sailing and a sinking ship. Up-front number crunching is your best strategy. Run before and after tax cash flow statements with confirmed figures.
5. Determine Last Rent Increase
If the rents were recently increased, your future income may be limited and, worse still, tenants might move. Check the date of last increase to know where you stand. Also, make sure the current tenants don't have short-term leases, living there simply to tempt the unsuspecting buyer. Examine existing leases and be sure to get tenants' security deposits from seller at closing.
6. Check Tax Assessment
A current assessment that will increase after your purchase--because it is old or doesn't include unrecorded improvement--could change your property tax expenses.
7. Investigate Insurance
If the seller's coverage is based on lower than current replacement value, your insurance costs may increase when you pay a higher purchase price.
8. Confirm Utility Costs
Ask the local utility companies to verify recent utility expenses, especially if any of these costs are included in your tenant's rent.
9. Ask Your Accountant
Especially concerning the tax questions, as well as your basic investment analysis, be sure to get a second opinion from your tax advisor or CPA.
10. Inspect, Inspect, Inspect
Never buy a property sight unseen. Nothing replaces on-site inspections and nosing around the property like a blood hound. Hire professional inspectors for structural and mechanical system opinions.
My staff and I are here to answer your real estate questions.
Please feel free to contact us.
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