by: Steve Gillman

Investing in real estate should be a pleasurable and profitable activity. Listen carefully to investors, though, and you hear not just success stories, but sad tales of stress and losing money. Here are some tips for keeping your real estate stories happy ones.

1. Have a top price. Properties have a market value, and then they have their value to you. Many investors pay too much just because everyone else is doing so, and then they have negative cash flow month after month. Just because others are paying too much for duplexes, doesn’t mean you have to. Once you decide on a top price that works for your plan (which hopefully involves cash flow), start below that and don’t go a penny higher. The time to set your limit is before the negotiations start, not during them.
2. Choose partners carefully. Investing in real estate can be an uncertain process. Too many decision-makers just make it more so. If you must have a partner, clearly define your roles before you start a project. Group decisions tend not to work well, and will cause you much stress. It is often best if one partner puts up the bulk of the money, and the other runs the show. Agree to a plan, then step back if you are investing the capital, and let your partner do his thing. Of course, step up and take control if you are managing the project.
3. Listen to what the market is saying. When the cabinet guy asked me for a decision I realized that I knew nothing at all about which cabinets people like. I asked him which ones home owners were most often choosing, and he pointed to one that three quarters of his last forty customers had chosen. Then that’s the one I want, I told him. Why would I argue with the market I am trying to sell to? I have seen sellers paint a home a certain color because they like it. That’s a quick way to reduce the market value of a home. What colors do the potential buyers like? That’s what is important.
4. Understand the numbers. Investing in real estate is all about the numbers. If it is an income property investment, it’s about one number in particular: cash flow. Be aware of whatever the local formulas are, whether gross rent multipliers or capitalization rates or whatever. Ultimately, though just be sure that after every last expense you’ll have cash flow from the very first month. If it is a residential fixer-upper, know what it will sell for and what it will cost to fix it up - before you even make an offer.
5. Don’t confuse investing with gambling. Investing in real estate isn’t gambling, or at least it shouldn’t be. There is risk, but unlike true gambling, the odds are in your favor. At least they should be, and you should be able to clearly see the outcome. This why you shouldn’t invest based on the assumption of continued fast appreciation. Over time, real estate values do trend upwards, but there is no guarantee that prices will continue up at any particular rate during a given time. Do deals in such a way that they’ll be profitable even if prices go nowhere. If values go up, you’re that much better off.
6. Do the research. Understand the statistics and information you are looking at. It is possible that the real estate agent will show you only the comparable sales that make the property look more valuable. With a bit of your own research, and an understanding of how the various numbers are arrived at, you can avoid overpaying. Many counties have made researching prices easy, with sales prices online. Other web sites, such as the U.S. Census site, have information on population and jobs. Understanding these figures can mean not investing in real estate just before the town declines.

These tips, like all others, are just guidelines of course. You can “gamble” on rising values, for example, if you really did your homework and know the demand for housing in a town is about to explode. You might pass up a great opportunity too, because you refuse to go $500 over the top price you set. While having a few rules and guidelines is a good place to start, don’t let them take the place of thinking when investing in real estate.

About The Author
Copyright Steve Gillman. For a Free Real Estate Investing Course, visit: http://www.HousesUnderFiftyThousand.com.

by: Dalvin Rumsey

Many people seem to attracted by the mirage of real estate investing, but most of them usually fail in this business. You an never get rich over night, but this is something few people consider nowadays. Everyone wants to succeed and keeps on speaking about real estate investing, but only some manage to finally win the battle of making lots of money.

Does it ring any bell? Yes, you are right. It is very much like struggling to loose weight! The concept of weight loss is very simple. You just have to burn more calories than you ingest and your body will react accordingly. Unless you have a medical disorder, this formula works for just about anyone. the weight loss industry has offered us thousands of ways to make it easier. Many of these solutions do work, but they only work if you also do some work on your own.

In many persons’ opinion, knowing the caloric content of different foods is relevant. Also, knowing the carbohydrate content is relevant. Having the advice of a physician, dietician and personal trainer will help you prevent injuries and make the most out of your hard work!

The same way happens in the real estate investing field. You need an attorney or real estate agent to assist you with constructing the offer and the paperwork will make it easier. You can go out and make hundreds of offers to motivated sellers and find a good deal. However, having information about how to solve the seller’s needs and construct an offer will help. Both real estate investing business and weight loss are simple, but neither is easy. It takes a lot of work!

Nevertheless, if you are willing to work hard and take a lot of consistent action, an expert or program will be more likely to provide you with more results. If you bought a book, course or program and already have results, another program, course or book will likely give you tools to get more results. Many people have experienced success with some real estate programs, but the truth of the matter is that a lot of them are not succeeding for the first time. They are most often people who have already been successful, and, with the use of some tools, became even more successful. So, find your own way to success! It is always better this way, trust me!

About the Author

Are you looking for a competent, experienced, Real Estate professional to represent you in the purchase or sale of your Real Estate Tri City WA home, land or building? Visit right now Tri Cities Real Estate ; Kennewick Real Estate.

Net present value (NPV) can be helpful to a real estate investor trying to decide whether or not it makes sense to buy a particular multifamily income property at a given price. Let’s take a look.

If you read our earlier discussion on present value (PV) and discounted cash flow, you recall that when you discount all future cash flows of a rental income property at a given rate of return, you can determine the present value of those cash flows. The concept concerns the time value of money. That is to say, having $100 today is preferrable to having that same amount one year, or five years from now. Inflation erodes purchasing power over time, income taxes might be higher, and (let’s face it) you might not live that long. It’s always a good idea, therefore, that investments in real estate be studied from a time value of money standpoint because the timing of cash flows from the investment might be more important than the amount received. But present value (though it tells you what the future cash flows are worth today) doesn’t necessarily say how much you are going to pay for those future cash flows. This is where net present value comes in.

Net present value is the difference between the sum of the PV of all future cash flows and the amount of cash you are going to invest to purchase those cash flows (thus, the name, “net” present value). For example, if the PV of all future cash flows is $100,000 and you’re planning to invest $90,000 to buy the rental property that generates those cash flows, the NPV would be $10,000 (100,000 - 90,000 = 10,000). On the other hand, if the PV of all future cash flows is $100,000 and you’re planning to invest $110,000 to buy the rental property that generates those cash flows, the NPV would be -$10,000 (100,000 - 110,000 = -10,000).

We’ll discuss what it means when the PV of cash flows are less or more than the amount of your investment next time. For now just keep in mind that NPV is used by investors to measure how much must be paid to receive a stream of future cash flows at a specified rate of return. Stay tuned.