by Judy Cook

I too was once a beginner real estate investor. When I got started in real estate it was in Houston, Texas in the mid 1980′s. That town was experiencing what our country is experiencing today. Over one third of the houses were foreclosed on … at one time or another … property values had dropped. FHA and VA had large volumes of houses that were for sale. After those foreclosures the FHA and VA needed to get rid of them. They would list them in the paper for all to see and to go bid on them. They sold them using closed bids. They would open out of the bid offerings on a certain day and award sale to the highest bidder.

It was a time when REO’s [REO stands for Real Estate Owned] were everywhere. It was the first time I understood short sale. When times are like they are now, it’s a good time to get out and make money. The real estate is there and the prices are good.

Plus, in this business, you don’t always have to use your money. There is someone else out there who will partner with you. Sometimes they are Dentists, or Professionals who have take their money and have decided they want real good returns. They will partner with you for part of the profit. This is not a bad way to go because the money flows in. And the good news is no one is looking at your credit report. No one is looking at you. And no one is putting out a large loan on your credit to bring your scores down. That’s worth something in itself, not having to spend time filing papers for the bank or the mortgage company. There is no waiting for the money, it’s already available.

There are plenty of people right now who understand a good deal when they see one. Everybody concentrates in the news about people being foreclosed on. They never talk about the fact that those same people need a place to live and are typically eager to rent a house that is in nice shape.

And unless you are in Texas where Lease Options are against the law, you could probably do a Lease Option and structure it in such a way that when the market comes back up they could purchase the house that they are renting from you at a later date.

I’ve found in the past that always makes for a better tenant that takes better care of my property. As a result my properties are more liquid when I need them to be. All in all, for us real estate investors, since we didn’t create this mess, and we are not responsible for the situation. So we feel real estate investors shouldn’t feel guilty when taking advantage of the mess that is in front of us.

There are ways for us to help out. I know, in the news they are talking daily about how the Government intends to fix things and how the mortgage companies intend to fix things and help people out, but there are still going to be way to many people who need help. It is our job to get out and see what we can do to help them.

Before you start your Real Estate Investing please stop by and see the wonderful free information we are offering you at our Beginner Real Estate Investing portal.

When you are ready to begin your Real Estate Investment Education in earnest then stop by our online real estate seminar portal and join our Beginner Real Estate Investing Training Program – it is open 24/7.

Once you make the decision to buy real estate investment property, there are a number of factors to consider and at least 10 things you want to look for. In this article, we’ll examine what those ten things for real estate investment property are along with a brief explanation.

1) General location – Location, location, location is the mantra in real estate. Unless the investment property is located in an area that will sustain or boast rents, and in turn be able to be sold for a profit, forget it.

2) Site improvements – Does the property require repairs that might eat away at your cash flow, or are there repairs that can be made that would substantially increase your cash flow and return?

3) The lease form used – In the case of a commercial building are you locked in to a favorable or very unfavorable lease? In other words, are you buying a favorable or unfavorable income, and for how long?

4) The income produced – How much income does the income property generate and is it realistic, and can it be sustained? Is there room to increase the income?

5)  Type of expenses – What does it take to keep the property operational? Is there anything out of the ordinary, and is there a chance that some expenses can be reduced or eliminated?

7) Management requirements – Will the rental property require a professional management company, perhaps a resident manager, or is it something you can handle.

Financing – Can you leverage the property? What about the rates and terms will you and/or the investment property qualify for the best loan possible? What are the loan payments?

9) Depreciation benefits available – How much of your income can you defer by depreciating the property?

10) Unique features – Is there anything about this particular investment that sets it apart from other real estate investment opportunities? Perhaps its location, construction, or maybe it offers great upside potential.

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One of the more important questions you need to answer before you make your first real estate investment is “just how involved do I want to become in the operations of my real estate investment?”

For unlike decisions you might have made in the stock market, which was whether to buy or sell and did not entitle you to make any decisions regarding the operation of the company, with investment real estate, you are in control and must now make the decisions that will affect the operation of your investment.

Once you invest in real estate, you become the CEO of your own individual real estate investment company so you have to decide just how involved you want to become.

Factors to Consider

How much time do you want to spend? Foremost, do you even have any free time to spend? You may have a full-time job with zero hours to spend. On the other hand, you may be retired and have nothing but time to spend; as a retiree, perhaps owning a real estate investment property is what you need to keep active. You get the idea.

How much stress can you handle? Maybe you have the time but maybe you hate the thought of talking to your tenants about repair issues, rent increases, late payment issues, agreement violation issues, and so on. In other words, maybe you just dread the thought of confronting tenants, period.

How much are you willing to sacrifice to maximize your profits? Yes, we all want to become wealthy, but that’s not likely to happen unless we inherit a fortune. So we should accept the fact that we either devote the time and deal with the stress or leave all the management responsibilities of our rental properties to someone else.

Types of Management Available

If you own rental income property and prefer to leave it to someone else then you have two phases of management open to you: resident management or property management.

A resident manager is someone who is hired that lives in the building and will take care of the day-to-day problems that may arise in owning rental income property. He or she should spend a lot of time at home, be conscientious, maybe something of a handy person, and should get along with the other tenants in the building.

In this case, you might want to rely on the judgment of the previous owner or just pick an individual (or couple) who is of retirement age and is usually there, or can perhaps find a young married couple happy to get a break on their rent.

A second choice would be a professional management company.  Their job would be to find tenants, show the apartments and negotiate leases, collect the rents, pay the bills and mortgage payments, keep bookkeeping records, make sure the building and grounds are properly maintained, and so on. In other words, to run the property as you would.

How Much Management Do You Want?

Okay, now that you’re acquainted with the management-intensiveness of investment real estate, and see that you can become as active or inactive in the operation of your rental property investment as you choose, how much management do you want?

Here’s a suggestion.

If you are able to find the time and can cope with the stress level, try managing the property on your own. If you’re working with a knowledgeable realtor who specializes in investment real estate, he or she can give you enough guidance for you to become familiar with the operation and management of your property. Other wise, if this is not your first venture into real estate investing, or you simply cannot find the time to manage it yourself, then consider hiring a professional management company.

The important thing is not to let the thought of possible management problems keep you from investing in real estate. Rental property management and the problems of management can be avoided.