Many people make the mistake of not investing in real estate because they can’t stomach property management issues. It’s true. Some people do not engage in real estate investing because the idea of having to deal with tenants and property repairs seems too annoying.

The good news for real estate investors, however, is that there are options that would allow real estate investors to become insulated from a property’s day-to-day operations. Here’s the key: Simply decide how involved you want to become in its operation before venturing into your real estate investment. Consider your property management options:

1. You can handle everything yourself. You can deal with the tenants and repairs.
2. You can hire a resident manager who lives in the building and takes care of all the minor, day-to-day problems that may arise. You are still in charge of renting apartments, collecting rents and paying bills.
3. You can employ a professional property management company to handle the renting, bookkeeping, and management end of the property operation. You are then left with a management-free investment. This, of course, costs money and reduces your overall return but, depending on your individual situation, you can be as active or inactive in the day-to-day operation of your investment as you wish.

Here’s the important thing: Do not pass up real estate investing because you are too busy to take care of it yourself. There are options. Even after paying the cost of a full property management team, your rewards from your real estate investment will still far exceed any of your other investments.

The term demographics refers to population characteristics such as the income levels, occupations, education, ages, household size, household composition, and so on. This demographic data can be obtained by real estate investors from the U.S. Bureau of Census and commercial market research firms at www.census.gov.

On a local level, however, and even more important than current neighborhood demographics, real estate investors must learn who is moving into the area. For example, a good sign for investors that there may be appreciation potential is when a historically lower-income area starts attracting middle or upper-middle-income younger residents, or when many residents in the area are moving from welfare to jobs.

How do you learn about an area?

First, get out of your car and talk with residents in the neighborhood. Talk with real estate agents, mortgage loan officers, retail merchants, schoolteachers, and others who might have firsthand knowledge about the area. Ask questions such as, whether they see the area changing, whether these changes are positive or negative, and what they like least and like most about the neighborhood. Then evaluate what you see and hear and form your own conclusions. If researched correctly, real estate investors should be able to form an opinion about the area that helps decide whether the people moving into the neighborhood are likely to push up home prices and rental rates, or causing it to deteriorate.

In this article, I want to inform real estate investors about “market value,” and why it may not indicate the best value for the property. It’s one of those nuances about real estate investing you might want to consider.

Market value does not necessarily equal “appraised value” or “sales price.” Market value refers to the selling price of a property only when that sale conforms to the criteria of a market value transaction. However, when you estimate the market value of a property based on the sales prices of other properties, you must always investigate the terms and conditions under which the comparative properties sold. A four-plex down the street that recently sold for $350,000, for instance, doesn’t necessarily indicate that a similar nearby fourplex will sell for $350,000. The sale price depends on the terms of the sale and the detailed features of each property.

Remember, too, the accuracy of your market value estimate directly relates to how well you describe the property’s features. Carefully identify the differences (positive or negative) that make a difference. To make profitable investment decisions, investors must know features, properties, neighborhoods, construction costs, and lot values, and then base their investment decision on knowledge, sharp reasoning, and wise judgment about their discovery.

Also, realize that market value and past appreciation rates do not forecast the future. Even if you buy investment real estate at a “bargain,” you’re not going to make money if the property is about to fall in value, whereas, you can make great returns even if you pay full market value if the property (or location) is about to take off.

Here’s the bottom line. Never buy a property without an accurate understanding of its market value. But understand that market value itself does not tell all you need to know to make profitable investment decisions. Besides figuring out what a property is worth today, also be sure to answer these questions: Will the property generate adequate cash flows? Can you expect the property to appreciate? Can you add value to the property?

PS. ProAPOD® Real Estate Investment Software 10.0 includes a comparative market analysis to assist you with market value. Plus, it includes a wide-range of computations and returns to help you analyze the property’s cash flow. Go to => http://www.proapod.com