Wednesday, December 20, 2006

Risk Management in Real Estate Investment

Real estate investment has provided many investors with stable positive cash flow, tax advantages and satisfaction of owning properties. Like any other investments, the secret of success is to minimize the risks in the investment. Real estate investment is one of options for wealth building.

1) Prepare for the Success

Sound real estate investment demands knowledge, experience and skills. If you feel too overwhelmed when looking at real estate investment. A good start point is to go to a reputable real estate investing seminars. Real estate investing seminars are actually wonderful tools for beginners. They help the investors to get educated - learn the market, do the appropriate research, and become skilled at what you need to face the estate competition.

2) Pay the right price for the right properties at the right time

In order to make a real estate investment, you must assess the risk involved. No one in their right mind should be making an investment if they don't know the current market trends or are misinformed. For instance, let's say that an investor was dying to make some quick cash. They see that golf communities are the newest trend and that most people are interested in spending money on the gated communities. As a result, they quickly invest in a New York golf community, but are confused when it doesn't take off. Due to the fact that they didn't research on the best areas to invest, and how weather may affect buyer's opinions, they are most likely going to have a difficult time selling something that isn't popular in that specific town.

3) Charge Fair Rents

If you are making a real estate investment and have done the research, you should charge fairly. For example, if you give your tenants a great area, reasonable rent, and are respectful, chances are they will stay and continue paying. If you overcharge and do not treat them fairly, you will be looking at a lot of vacant real estate. In the end, you will have more problems then when you started. You also should be doing detailed inspections. You do not want to miss any problems and then realize later that you made a big mistake in price.

4) Choose the Right Agents

When trying to take your investment to a seller, it is crucial that you check for their resume. You want to work with someone who is a great professional, not someone who is just out to scam you. Therefore, check every number and reference on their list. If you are spending all of this money on a golfing community, you will want to have a great representative.