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Welcome to Bizwrite's Real Estate corner!

There has NEVER been a bad time to get into real estate. When the market is "on the up", many people think "How I wish I had got in while I could!"

Now that there's a lull, the REALLY savvy people will see their opportunity!

Come and join us at Bizwrite. Whatever kind of information you are looking for, there'll be something here for YOU!

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Real Estate - How to Succeed

You CAN succeed in real estate. Now that there's a lull in the market, opportunities have never been greater.
But aren't there lots of horror stories from people who invested their life savings in real estate and got their fingers burnt?
Sadly, yes there are. There are lots of costly mistakes real estate newbies make.

Falling in love with the property. This means you'll be emotional, not objective, about tenants, prices etc.

Investing blind - blindly buying real estate on the basis of bogus advice.

Not having cash reserves. The two key words for survival in real estate are "cash flow". It's easy to buy "nothing down" - they even tell you how to do it with your credit card. But credit cards need repayments. Repairs need doing. The more urgently you need cash, the more pressure you will be under to make the wrong decisions about repairs, tenants, etc.

Not doing your homework. Bob, a business consultant from New Jersey, went with two of his pals to a seminar on "nothing down" real estate investing, using the "flipping" technique (re-selling quickly for a profit). Following the seminar they pooled their resources and put down a deposit on a building suitable for conversion into 5 apartments. They spent huge amounts of time and Bob quit his job to concentrate on the work it needed. But they hadn't checked the zoning arrangements - the building was in an area zoned for 3-apartment buildings. The conversion to 5 apartments was illegal. The owner refused to return the deposit and the three were out $35,000.

Not pre-screening tenants. When tenants appear, it's very tempting to grab the cash and let them move in right away. Of course you don't want your property sitting empty - it's expensive and depressing. But it can be much more expensive and depressing to evict a bad tenant.

So how can you avoid these costly mistakes?

Keep a cool head. Don't get carried away when you see a pretty house.

Remember that real estate investing is a BUSINESS to be worked at, not a cash cow.

Accumulate cash reserves BEFORE starting out. One possible way of doing this is by "flipping" - buying without cash for immediate sale, assuming short-term appreciation. But be very careful - it's a risky strategy. You can't always believe predictions of appreciation from people who are hoping to make a quick sale.

Get as much knowledge as possible about the real estate business. In real estate investing, risk is in direct proportion to knowledge. The greater your knowledge of investing techniques, financing, acquisition etc., the less risky your investment will be.

Do your homework. Check the area's current rental market. What are the vacancy rates and average rents for properties like yours? What are the zoning arrangements? Have new rental complexes in the locality been approved by the authorities?

Inspect the property. This is a MUST! Find out about structural damage, pest problems, other problems. Hire a professional if necessary.

Don't just grab the first tenants who come along, tempting though it may be. You MUST make them fill out an application. Check out their credit history, employment history and rental history.

Don't let tenants move in without a security deposit.

Charge fair rents and treat your tenants fairly. Remember that vacancies, turnovers and terminations are your biggest expense.

You CAN succeed in real estate, whatever the market is doing. But just take off the rose-colored spectacles and remember it's not a cash cow. What brings success is taking the time to learn the business, learning from your mistakes, and taking advice at every stage.