When you are in the market for a home, how should you evaluate the properties that appeal to you? There is an old cliché about the three most important factors of a piece of property--location, location and location.

Some neighborhoods have a certain distinction that attracts buyers, but there are other factors to take into account. A house in the best part of town may have a few points subtracted if it is located on a busy street. There are buyers who would like to be close to schools, shopping, and churches, but don't want to live across the street from these facilities. You may want an easy commute to your job, but would not consider a location close to the "on" ramp for the major route into town. A location close to a airport could be convenient if you are a commercial pilot, but could make it difficult to sell even the most wonderful house.

As you balance all of the factors, remember that a location liability which gets you a great house at a reasonable price will probably require you to pass a similar savings on to future buyers.
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You see them on cable TV, sitting around a swimming pool, sharing stories about how they got rich quick by buying valuable real estate for give-away prices. They took a course on how to invest in real estate and became millionaires overnight--with nothing down and no credit hassles from mortgage lenders. The course worked for them, and they say it will work for you, too.

If all this sounds too good to be true--it is! These "get-rich-quick" courses and schemes are being investigated by consumer fraud agencies around the country. This does not mean that you can't become a millionaire by investing in real estate. But investing in real estate requires one important thing from you--an investment of cash. You can't build an empire overnight, but you can do very well over the long term by selecting property in a good location that is priced well, and which can provide a reasonable cash flow.
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It is important to attract and keep great tenants when you own investment property. A good way to begin a positive tenant/landlord relationship is with clear communication about what you expect from your tenants and what they can expect from you.

The written lease agreement spells out the legal obligations of each party. The landlord must ensure that the property is habitable and complies with local codes, and the tenant must pay the rent in a timely manner and not damage the property. Make sure that the terms of the agreement are stated clearly in straightforward language.

Let the tenants know of your commitment to keep the property in good repair and of your desire to know about maintenance problems before they become serious. When it's time for the tenants to move, offer to provide a reference letter if they need one. This is a nice way to say "thank you" to them for having maintained the property during the terms of their lease. Good communication can help you to maintain the quality of your investment.
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Some neighborhoods have the reputation of being terrific places to live, and the difference is often the investment that people make in their community. These neighborhoods embody a community spirit that reflects the pride of the people who live there. In addition to the financial investment the residents have in their property, they also invest their time by participating in local affairs.

How can you become active in your community? You can participate in your neighborhood association by volunteering to serve on committees. You can keep abreast of issues that could impact your area by testifying at hearings or writing letters to local government officials. There may be ways that you can help your neighbors if they are having a hard time with a serious illness or job loss. If your children are grown, you can make a tremendous difference by doing volunteer work in after-school tutoring programs. When some people begin to get involved in making a difference in their neighborhood, others soon follow.
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Individuals who invest in real estate are doing very well these days. The potential for income, appreciation and possible tax savings makes investment property especially attractive.

It is important for you to get professional advice before you decide to buy investment property. You may want to start with a personal financial advisor who can help you set your investment goals. Your real estate agent can help you select a competitively-priced property that meets these goals, and can answer questions about why a particular property would be a solid investment. What features would make it easy to rent? What kind of maintenance expenses are you likely to incur? What will your cash flow be, and how will the tax savings affect your bottom line? While we cannot predict how much a particular property will appreciate, we can give you the history of price trends in our market area.
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When you buy an investment property, there are two important financial goals to consider. You will want a property capable of producing rental income. When you sell, you hope that the property will have appreciated enough that you will earn a good profit on your investment. If your property has enjoyed a healthy appreciation, you may need to do some careful planning to avoid paying out most of your profits in the form of capital gains taxes.

When selling your primary residence, you may be able to defer your capital gains taxes when you buy your next home. This does not apply, however, to investment property. If you sell one property then purchase another, the taxes will be due for the year the sale occurred. On the other hand, if you arrange to trade one property for another, you may be able to defer the capital gains tax.

It is not as complicated as it sounds! Many real estate agents and attorneys specialize in helping their clients put these kind of transactions together. You don't have to trade buildings with the people buying your property. The property you trade may belong to a third party, and your buyers need only cooperate with the closing attorney to make the transaction work.
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While it is impossible to predict what a particular house will be worth at any point in the future, single family homes have a track record of being excellent investments. If you want to take the plunge, what should you look for in an investment property?

Location is the prime factor. A great location will make a property easier to rent or sell later on for top dollar. You should also consider the cash flow situation. It is often difficult to break even or show a profit from your rental income for the first few years of owning a property. Assuming the property will appreciate as you own it, you should consider the potential amount of equity you will build up each year. If you are planning to become a landlord, it is a good idea to consult a real estate agent and an accountant to help make sure that your decision to purchase investment real estate is an informed one.
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Real estate agents can provide you with information about how the local market has performed historically, in order to help you work out a strategy for investing in real property.

Historically, real estate has been a superb long-term investment. Many people have created fortunes on short-term investments in hot markets. Remember that the local market will be influenced by factors beyond your control, such as interest rates, economic trends, local employment opportunities, and the demand for and availability of rental housing. All of these factors are subject to change, so timing is crucial. A slow market can mean real values for buyers, but a fast market could heat up for several years, pricing timid buyers out of the market. Your real estate agent can't predict the future, but he or she can help you interpret the present.
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One of the most important factors that affect the value of property is obviously location. Wise investment philosophy suggests that you invest in a sound property in a more modest area that will increase in value in the future. Buying into an area that is being gentrified, or that is otherwise coming back, is one way to do this.

Timing is everything, however! Most investors don't want to risk too much by being a pioneer, but want to get involved early enough so that there is still considerable room for appreciation in value. Being a pioneer is fine if you are a risk-taker with a lot of patience and cash is not the primary issue. Otherwise, it is safer to buy into an area after the restoration trend is unmistakably established.

Neighborhoods that are ripe for restoration have some common characteristics. They are next to a prestigious area or in a good walk-to-work location and have houses that are basically in good condition or "fixer-uppers" with realistic price tags.
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If you are the owner of an investment property, you are responsible when something breaks down in the building. So when the tenants call with an emergency, you will need to have a list of local repair companies you can contact, and money in the bank to pay for their services.

One of the best ways to protect your property investment is to purchase a home warranty that covers your home against unexpected system breakdowns that can be costly, particularly if the heating or plumbing systems need repair. The yearly cost of a good home warranty is probably less than the cost of replacing a broken water heater. If your property is older, a home warranty will provide you with greater security and peace of mind.

Another way to plan for investment property repairs is by building up a monthly surplus account, where part of your positive cash flow can sit in preparation for the day some major repair is needed. Having a "rainy day" fund will relieve you of financial stress when something has to be fixed.
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Some economists link the buying habits of "baby boomers" to the demand for homes in this country. They argue that the population will stabilize or decline as these potential buyers age and their children are grown.

What is left out of such a picture is that the emerging real estate market is made up of people who are immigrating to this country. When these newcomers have achieved a stable income, they look for the best living situation they can find, often preferring buying to renting.

Real estate continues to be an attractive investment opportunity. If you are sitting out the current market because you are afraid that the appreciation won't continue, you may want to re-think your decision. Today's market is providing opportunities for homeowners and smart investors from all over the globe.
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When you own an investment property, one of your goals will be to get the highest monthly rental with the lowest vacancy rate. How can you accomplish this? It pays to keep your property in good condition while you are trying to rent it, as well as after the new tenants move in. You obviously want the property to look its best when it is being shown. If you work to keep it that way, your tenants are more likely to feel motivated to stay in the home.

When something needs to be repaired, be sure the tenants know whom to call to get the job done. Arrange for periodic inspections of the property to check for leaking roofs or pipes, defective wiring or malfunctioning appliances. If you are an absentee landlord, it makes sense to hire property management professionals to keep a close eye on your investment for you.
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Homeowners who don't need the equity from their home to purchase a new home may consider renting it instead of selling. Rental property is almost always a good investment, but you should understand the consequences of becoming a landlord.

Tenants may not share your pride of ownership and, therefore, may not maintain the property like you would. If you plan to rent your property, acquaint yourself with state or local landlord/tenant laws, including those dealing with rent control and eviction procedures. If the home you rent has been your primary residence, you could lose the benefits of a capital gains deferral when you sell it later. Get professional advice from a tax expert and a professional real estate agent before you decide to turn your home into rental property.
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Are you waiting for "just the right time" to get into the real estate market? The signs indicate that there is no time like the present. Interest rates are still comparatively low and buyers are shopping for new and second homes in great numbers.

Vacation homes are very popular for investment purposes and personal enjoyment. You can use your vacation home as a getaway property now, and by the time you retire you will have paid a significant amount on the loan. If you live in a vacation home for 14 days a year or less, you can take depreciation on it.

Another important benefit is that tax deductions in the form of interest and property taxes help to offset the cost of paying for a second home. If the debt does not exceed $1 million, mortgage interest payments on principal residences and second or vacation homes are fully deductible for tax purposes.

Don't waste valuable time while interest rates creep upwards -- all you need is the right real estate agent to guide you!
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Buying a second home as rental property makes a great centerpiece to your retirement plan. It forces you to make regular savings in the form of mortgage payments that become your equity.

You only need cash for the down payment, and you should make sure that your monthly rental payments will cover the mortgage and any additional expenses. This is a real possibility if you buy the right house at the right price because a good single-family house should always stay rented. Your investment money is subject to less income tax, and the interest and property taxes may be deductible.

Housing has appreciated in value all over the country in recent years, making a second home an important hedge against inflation. Most experts predict that interest rates for fixed-rate and adjustable mortgages should remain in single digits for the foreseeable future, so it should be easy to acquire financing with a small down payment.

Contact me with your real estate questions. I have helped many people sell their homes and properties--and to purchase the home of their dreams.
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Marketing a rental property presents some special challenges. Owners will probably want to offer the house for sale while tenants are still living there so that the property continues to bring in income. However, most real estate agents prefer that their listings either be occupied by the owner or empty. Tenant-occupied homes are often the most difficult to sell since the tenants may not share the same pride of ownership. They may not be eager for the property to sell, and as a result, the house is not shown to its best advantage.

When you put a tenant-occupied house on the market, it is important that you enlist the tenants in the effort to get your house sold. Talk to the tenants first to see if they have a desire and ability to buy the house. If they are not interested in buying, work out with them the ground rules for access to the house. In most cases, the new owners will want the tenants to move, and it will be important to work out alternate living arrangements with them. In each situation, work hard to create a spirit of cooperation with the tenants.
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When you buy an investment property, finding and keeping a tenant is very important. I have found that a little caution during the screening process can save a lot of headaches later on.

I rely on an intuitive sense of how a prospect feels to me. While this is an important aspect of a landlord's decision-making process, following up on your intuition by checking on the facts is definitely worthwhile. Have prospective tenants fill out an application giving employment references and the names and addresses of previous landlords. The application should also include written permission for you to run a credit check. In most areas, it is difficult and expensive to evict someone who turns out to be less than a model tenant. Only after you check their references and credit history should you allow them to move in.
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Shelter is a very basic human need which most people accommodate by renting or buying a house or apartment. Rental property is often less-than-perfect. Tenants usually experience a rent increase every year or so and feel somewhat at the mercy of the owner. They don't necessarily feel a strong commitment to the property or the community.

Making a decision to buy a house is a major commitment, and the decision has both economic and emotional implications. Instead of paying the landlord's mortgage every month, homeowners pay their own mortgage and build up equity in their investment. When they paint, plant flowers or make improvements, their family reaps the benefits of a more beautiful environment. Homeowners are much more selective than renters about finding the perfect home, and their sense of personal satisfaction heightens the pride of ownership.
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Your child has just been accepted to a university. When you look at the room and board fees, you nearly go into shock! If the school is located in a large metropolitan area, there is an interesting alternative to the college dormitory.

Many parents are investing in condominiums or single family homes near the college campus. They rent the house to their children and one or more roommates. When their son or daughter graduates, they sell the property. The property's anticipated appreciation may go a long way toward helping to finance college expenses.

Many parents sit down with a local real estate agent after their son or daughter is accepted to a college. I can provide information about neighborhoods near the school, properties that are for sale, and the amount of rent you can expect to receive from the property.
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