Key Financial Factors For a Residential Real Estate Investment

Investors are often easily wowed by the financial characteristics of a prospective investment. However, shiny exciting numbers are fraught with risk. Instead, investors should focus on a few basic characteristics to select and make investments in the real estate markets.

Before we jump into what to look at, a discussion of what to avoid deserves attention. Investment plans that rely on the unproven even for a specific project should be avoided by smaller investors. To be clear, I am not saying that all such plans are bad investments. In fact, many are superior investments. However, for smaller investors (though possibly quite sophisticated, this requires resources and a tolerance for potential loss that many aren’t armed to support. So, to continue, avoid the following:

  1. Investments that are not based on a long standing established revenue and expense profile.
  2. Investments that project new revenue based on changes that are not in place at this point in time.
  3. Investments that require heavy capital improvements to maintain the existing base as these often require underlying assumption on post improvement costs and buying that may not prove true.
  4. Investments that expect a major repositioning in the market place.

With this in mind, what should a proposed investment deliver? Some of the major characteristics include:

  1. Low leverage. Some consider 70% low leverage. The events of the past few years support placing this at 60% or less.
  2. If financed, the debt should have a long horizon. This should be 5 or more years.
  3. The debt should be at a fixed rate unless put in place at the peak of a rate curve. However, estimating whether the rate is at a peak includes assumptions that may not prove true and could create unnecessary risk.
  4. Revenues should be based on historical results and should be demonstrably consistent in the surrounding market place.
  5. The demographics should be consistent with the future expectations and demographic trends should prove the assumptions are sustainable.
  6. The economy should be diverse and offer proven performance even in weak economies.
  7. Expenses and services should be proven with a diverse base of sources to serve the investor.
  8. The management contract and principals incentives should be consistent with the investors goals. In consistent goals will inevitably result in disappointing results for the investor.

While these items may narrow the potential investments for smaller investors or perhaps even not so small investors, these considerations will protect against losses, disappointment, and frustration and at the same time assure the continued investment portfolio that is important to your asset and cash flow goals.

Residential Real Estate Investment Advisor Vs Multiple Listing Services

There is a difference between a residential real estate investment advisor and a multiple listing service. Deciding between the two depends on whether you plan to invest in property or plan to find a home to live in.

A residential real estate investment advisor helps clients make a profit. A multiple listing service helps buyers to view different properties on the market. The listing service can help identify possible properties to invest in. However, you will benefit more from an advisor who specializes in investing in residential property if you need help with the financial side.

A multiple listing service is limited because you just get the price of the property. You do not necessarily get advice on how to improve your returns. The multiple listing service is mainly interested in selling property as quickly as possible. A residential real estate investment advisor is there to maximize your returns on each of your investments. If you need help finding out about the risks and possible returns on investments, you need to hire an advisor. The advisor will help you manage your risk. He or she will also help guide you through the process of buying and investing in residential property.

The clients of an advisor get more personalized services. An advisor will assist in identifying the property. He or she will also help with the financial planning of buying the property. A multiple listing service does not help with the property acquisition process. The listing service’s list is also open to the public. This makes it harder to negotiate a better deal because there is usually more competition for those properties. An advisor may have leads on other investment properties that are not listed. Because the advisor has worked in a certain area for a while, he or she will have more information than a listing service based somewhere else. Clients benefit from their experience and expertise by getting a good deal on a piece of property that will yield a great return.

You can invest in property without the right advice and end up buying something that will cause you to lose money. It is important that investors to get good advice. The wrong investments can ruin financial plans for a long time. Like their counterparts in the stock market, residential real estate investment advisors offer services that help to maximize profits for their clients. Using their expertise in a given area, these types of advisors will help build your wealth far more than a multiple listing service in the long run.

The Guide To Real Estate Investing Book – A Review

Have you ever wondered if there was one resource for people interested in real estate investing, like the Guide To Real Estate Investing book? There are several of them, although none have exactly that title. I’ve read many of them, and I will give you my recommendations in this article.

When you’re looking for a comprehensive guide like the Guide To Real Estate Investing book, you need to understand that there is not one single book that will be all things to all people. Different investors will be looking for different information, depending on the type of investing they’re interested in. If you’re interested in residential income property, the Guide To Real Estate Investing book you choose will be different than if your interest is in commercial real estate or apartment complexes.

In other words, there isn’t one, definitive resource known as the Guide To Real Estate Investing book.

My experience and expertise are in residential real estate, such as single family homes and duplexes. Therefore, this discussion will focus on the Guide To Real Estate Investing book for that type of investment real estate.

Two of the best books I have read on residential income property, both of which could be seriously considered as the Guide To Real Estate Investing book, are Steve Cook’s “Wholesaling For Quick Cash” and “The No-Nonsense Real Estate Investor’s Kit: How You Can Double Your Income By Investing in Real Estate on a Part-Time Basis” by Thomas Lucier.

These books offer two different approaches to real estate investing, both of which are excellent. Steve Cook’s “Wholesaling For Quick Cash” is really a full-fledged real estate investing course, giving you a complete strategic plan for breaking into the world of real estate wholesaling. It qualifies for consideration as the Guide To Real Estate Investing book because it’s a self-contained investing philosophy and plan.

Lucier’s book, “The No-Nonsense Guide” is a book that gives you a complete, basic run-down of the important considerations when considering beginning real estate investing, as well as some complex and effective advanced strategies. This one is a sure-fire candidate for the Guide To Real Estate Investing book.

Of course, there are plenty of other excellent candidates for the Guide To Real Estate Investing book- these two are simply my favorites. If you have found a resource you think warrants consideration for the Guide To Real Estate Investing book, why not email me and let me know?

For now, check out my website, where I have tons more resources for investors, and some of the best articles and stories on real estate investing you’ll find anywhere! Hope you enjoyed this little article on the Guide To Real Estate Investing book.

Now, go make more offers!

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