How To Successfully Invest in Real Estate
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How To Successfully Invest in Real Estate

A simple how to for the average person thinking of investing in real estate. A number of dos and don't, and a bit of foresight and being able to 'read' an area to find whether or not it is likely to advance. Knowing when to buy and when to sell, and going for the small quick profit instead of imagining the big pay off at some nebulous future date

When the mortgage crisis raged across America, it missed Brooklyn.  In fact, prices went up in Brooklyn.  If you expected this to happen, if you had invested in Brooklyn real estate, then you do, (as Ferengi say) have the lobes for real estate investment. If you don't know why Brooklyn is prime real estate, and you don't know how to find out, do NOT think of investing.  

In a previous article I mentioned how  developers were able to take a housing scheme which looked about two steps  from being knocked down and/or  labeled 'Slum' and turn it into a desirable address.  

This is how they knew they would be successful; this is how anyone who wishes to invest in real estate will be successful.

1) Location

This can not be overemphasised.  Where the property is is more important than what it is.  A mansion in some out of the way place which might seem 'ideal' is not for working people or people who like to travel.  Sure, you'll find the stray 'need to get away from it all'  type who might be interested, but if the price isn't right;  for example they can buy an empty lot and construct their 'dream home' for relatively the same price, that property will never be sold.   Those apartments within walking distance of the subway, with shops lining the road two blocks from their door step is far more inviting.

Hence Transportation is a key factor.  In cities  like New York, the subway has become more popular than the car.  One can hop on a subway and within 20 or 30 minutes step onto 42nd Street.  They don't have to worry about traffic jams, parking, gas; they are at their place of business without the stress.  They leave work, onto the subway and home, and if they want to drive out in an evening for dinner or a movie, fine.  But they don't have to imagine the traffic in New York City.

2) Amenities

I've already referred to shopping, now look at schools and religious congregations and associations; all in walking distance. Various entertainments are perhaps a bit of a longer walk, and here a car or a bus might be used.  But one can often bicycle to many of the locations without much sweat.  Hence one might need no more than a bicycle to get where they want to go.

With these two items checked, the area you are looking at, which might seem non-descript at the moment, will catch the eye of a large investor and shortly become a desirable address.

For the small investor understanding the 'right' price needs a bit of study.  Never buy anything 'over-priced' in your calculations. You may never be able to sell it.  When I use the term 'your calculations' I am assuming you've done a bit of research on what the basic values are; what the premises were purchased for and when, what a valuator will determine now, and how long before the area 'picks up' (or declines).  

When you purchase property at the price you think it should sell for, (again, this isn't instinct, this is calculations) and you are offered a fair resale price, consider a few things;

1)  Is it likely that this property will, within the next six months, make a substantial gain in value/stay the same/decline?

This is a matter of careful consideration.   Too many people 'hold out' for some imaginary price and wind up losing the property to the bank, or having it deteriorate over the next years.  As a small investor, getting in, making a profit as you get out is how to become a large investor.  Thinking that the price will  dramatically increase 'just so' is ridiculous.  Unless you know, for a fact that some major development is imminent; (not 'you heard' or 'you believe' but you know) by turning down a fair offer, you might have lost your only chance to unload the property.

Remember, those who make major investments have budgets and often look at more than one area.  Where they find resistence they move to the other.  Persons like you who are making smaller investments have budgets and projections, and will move to another possible.  

If offered a fair price, counter offer 10% higher, and take it if agreed, and move on to another piece of property. 

Always have an idea of what property can be used for; for example, buying a house as an investment, renting it out until you find another buyer is a way not to lose money.   Buying a business premises which is tenanted and keeping the tenant on while you decide what to do with the property is another way not to lose money before you gain it.

Success is not beyond your grasp, it just takes a particular kind of business sense.

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