10 Big Mistakes Novice Real Estate Investors Make

Buying real estate is as popular as ever, and it seems pretty straightforward at first glace. With mortgage interest rates at all time lows and plenty of real estate to buy, many investors truly believe that they can do a bit of cosmetic work, accessorize a bit, and then put up the for rent or for sale sign. Unfortunately, it is not quite that easy and there are some common mistakes that can be avoided if one plans ahead and truly understands what he or she is getting into before investing.

Don't Fall In Love

The first rule of thumb when you are investing in real estate is that you cannot fall in love with any one property. When you are looking at real estate to buy for investment purposes you can't think like a homeowner, you must think like a business owner. Don't think about what you like about a home or a piece of real estate, think about how well it will sell or rent in the current market.

Not Exercising Due Diligence

When you invest in real estate you can't simply invest if the property looks good at face value. A very thorough inspection of the structure needs to be done as well as research on the local market. One must also look into the vacancy rates and average rents for homes or structures that are comparable. A diligent business owner will also look into how the neighborhood is zoned as well as any regulations that will apply to the rental property. You will also want to check into how many other rental properties are in the area and if they are comparable to the property you are looking at.

Forgetting the Rule about Time and Money

Many new investors forget that all home improvements are not as cheap and as straightforward and they hoped that they would be. The rule that most investor's use is that it will take twice as long and three times the money than you would think to ready a unit for rent or sale. Real estate isn't transformed over night, so one must plan accordingly. Failing to plan ahead for this can leave you in a real bind where you lose money because you don't have the resources to complete a project.

Believing You'll Secure the Lowest Mortgage Rates

Television can be very deceiving for those that are in the real estate investment business. The low mortgage rates are not offered for just anyone, they are for owner occupied homes, which are considered much less of a risk than a unit that is rented out. Homes that will not be owner occupied will experience mortgage rates that are 1.5 to 2% higher, which can make for a huge difference in monthly payments for the investor and his or her tenants. You also need to be aware of your credit, if you have terrible credit you won't have much luck getting a loan, but the better your credit is the better your rate will be.

Failing to Pre-Screen Tenants

Many new landlords are so anxious to get their new tenants moved in that they forget all about screening them to be sure that they have a relatively clean credit history, they are gainfully employed, and that they have a good rental history. While screening tenants can take a bit longer than you might like to wait, it's easier to get this done than to try to evict a tenant. It's always better to pre-screen than deal with the headaches later.

Breaking Your Own Rules

New investors often set business rules for themselves, and then occasionally they get a bit soft. If you have established rules about what day the rent is due, pet policies, waterbeds, or lawn care, stick with those rules. The minute you stop obeying your own rules you set your self up for disaster. If you stick to your rules and you refuse to break them no matter the situation, you will find that you are much more successful in a business sense.

Investing in Obscure Areas

Generally, it is not a good idea to invest in properties that you cannot visit regularly. Long distance real estate investments leave you out in the cold and you may have no idea what is going on in or around your property. It is a good rule of thumb to only invest in areas that you live.

Paying More than the Property Is Worth

New investors often do not do the proper research and end up paying more for a property than it is worth. When you are investing you have to think about yourself, even if that means that you have to low-ball the seller at first. Investing in real estate is all about getting the right price for you. You need to know that you can cover your mortgage and your expenses from a rental payment, so really consider what the local market will allow.

Failing to Look into the Competition

It's a good idea to look at the competition, especially if they are successful. Lower payments, exciting features, and more will often help fill rental units. Pay attention to what works in your area and duplicate it if possible.

Not Acquiring Enough Insurance

Being under insured is a common mistake of new real estate investors. You need to know that your insurance company will cover accidents on the property as well as damage due to fires or natural disasters.

As you can see, there are a lot of mistakes that you can make. Luckily, if you plan ahead and do not rush into real estate investment you can avoid a lot of these pitfalls, saving you a lot of time and money. Avoiding mistakes will help you become a much more successful real estate investor.

Andrew owns a website that offers useful guide on real estate business. Vist his website at: http://www.buy-and-sell-house-fast.com/ for more tips.

Real Estate Investment Financing

Real estate investment financing is a better option than the traditional residential real estate mortgages. The financing in this sector is done mainly by borrowing money as it is more lucrative than investing one?s own money in a single real estate. Real estate investment is a great possibility for many people to gain equity and to generate cash flow and due to this, demand for commercial real estate investment financing is increasing day by day. The real estate investments include homebuilder stocks, real estate mutual funds and real estate investment trusts (REITs).

A real estate investor can get around 98 percent financing for his investments. Even, cent percent financing is available. Zero down real estate investment financing is a fully documented loan which is provided to a single family, townhouse, or condominium. The only requirement for this program is excellent credit. It is now available at reasonable rates. For investment properties, limited and no documentation loans are also available.

Many companies are providing financing for the real estate investments. Most of the business concerns are allowing a maximum of 5 to 6 new rental property mortgages yearly. These companies provide low interest rates and quick close available (48 hours) options to the investors. For a reliable and stable financing, short term and interim financing loans are available. It is hard for a person to get real estate investment financing for more than six properties in a single year. In this situation, sellers financing is the best alternative for achieving the maximum leverage of the investment.

There are various real estate investor financing books available in the market from where one gets rich information about the financing methods. Other means through which one gets ample information about the real estate investor financing are courses, books, tapes, software and services. Before trying a real estate investment financing, make sure that the banks are regulated by the federal government and are capable enough to underwrite conforming loans.

Real Estate Investments provides detailed information on Real Estate Investments, Real Estate Investment Trusts, Real Estate Investment Loans, Real Estate Investment Financing and more. Real Estate Investments is affiliated with Buying Investment Properties.

Top Locations for Property in North Cyprus

While the world is in agreement that property for sale in North Cyprus represents a fantastic investment opportunity because rental and resale demand is soaring while at the same time property prices remain incredibly affordable, there are certain parts of the island that make the best property investment hotspots.

It is not a case of every location being equal or of every property of a similar size and specification being worth the same in Northern Cyprus - just as it does anywhere else in the world location, location, location counts in North Cyprus.

The first location worthy of closer inspection is Esentepe to the east of the island and a twenty minute drive from the ancient harbour town of Kyrenia. Esentepe is home to a brand new, international standard, championship golf course - furthermore it is the location for the very first marina being built in Northern Cyprus.

Naturally enough these two factors alone create great reason for property in Esentepe to be highly prized, but there are a number of other reasons making this location worthy of closer inspection. Firstly land in the area is now selling for a premium as developers try to get in on the property boom, secondly rental demand for properties in the area has gone through the roof following the completion of the golf course, and thirdly the entire surrounding area is totally unspoiled, it is covered in lush olive and carob trees, the beaches are pristine and undeveloped and the people live in their traditional houses and still enjoy an unhurried and stress free kind of life.

Properties in Esentepe start from GBP 60,000 for duplex apartments within the golf resort and go up to around GBP 200,000 for custom built, luxury detached homes. Prices in this part of Northern Cyprus have been appreciating rapidly in the past 4 years.

The next area worthy of consideration is Alsancak which is to the west of Kyrenia and just a ten minute drive from the heart of the old town of Kyrenia. Alsancak is one of the most popular parts of Cyprus with holiday makers, there is a great deal of development already earmarked for the area and there's an abundance of beach clubs, bars and discos in the area. For property investors hoping to let their properties out during the long hot spring and summer seasons in Cyprus, Alsancak is most certainly worthy of consideration.

And finally - unspoiled, untouched and as yet almost undeveloped Karsiyaka which is a thirty minute drive to the west of Kyrenia. With its hidden coves, sandy beaches, stunning mountains and beautiful countryside, the area of Karsiyaka is going to become one of the most desirable places to live in North Cyprus because the government has set incredibly strict planning rules to prevent over development and to allocate a great deal of space for the likes of another golf course and marina, and also they have allocated space to be left completely untouched. This part of Cyprus is unique and it has to be seen to be understood and experienced!

Karsiyaka will become home to the discerning buyer, those looking to escape to a better quality of life in a superior location. Currently there are few developments in this area of the island but those that are available start from around GBP 80,000 for a two bedroom bungalow.

Rhiannon Williamson writes about real estate investment in emerging markets around the world and specifically profiles exciting investment property locations. To read more real estate property in North Cyprus click here.

Avoiding the Rental Voids in BuyToLet Property Investment

At some point, every buy-to-let investor will face the spectre of rental voids but it?s what you do about them that makes you either a victim of circumstance of a savvy investor. The smart investor takes action to minimize such down periods and here are a few tips I?ve found helpful in doing so:

Seasonality: There are certain times of the year when people stay put because they're focused on other things. Summer holidays and Christmas are just a couple of those ?things? that affect large numbers of people at the same time. After summer, you?ll find that September should see more activity (and you can probably write off most of January, too). The summer dip is particularly relevant in areas of high student density, e.g. university towns, especially if your property might normally be let to these types of people or people related to this business. Wherever possible, then, ensure that your existing tenancy doesn?t end around these times.

Apathetic Letting Agents: Try and gee them up by telling them that you're placing your own ad and if you introduce the tenant you want a reduction in their fee. You could also make your property available to more than one agent and promise that the first one to fill the vacancy gets the management for the next year. If an agent thinks they?re the only one, they won't be inclined to try so hard.

Be Proactive: Don?t just sit back and wait for others to do the work. Remember, it?s your money that?s dripping (or gushing) away all the time the property is empty. Here are some ideas of actions you might take:

? place your own ad
? directly contact large employers and accommodation officers in local hospitals and universities
? offer an incentive (free TV/DVD player/holiday/champagne, etc)
? drop the rent to just below market for the area (a reduction of ?5 a week for the year = ?260, compare this with how much you?re losing each month the property is empty and you have to continue paying the mortgage)
? find out what people are looking for that would make your property more attractive than others that are currently vacant

To Furnish or Not? Only consider furnishing the property if you're getting people asking for it to be furnished. If you just do this on the off chance, you could end up with a bunch of furniture to get rid of if they then want it unfurnished. You might list as will furnish if required. Quite frankly, the achievable rental will be barely affected, if at all, and you'll then be liable to replace things as they wear out (although you will be able to depreciate the costs of furnishings by about 10% per annum off your tax bill ? see my article on ?Reducing Property Income Tax?).

If you do go the route of furnishing, get new (IKEA, perhaps) rather than second hand. Although the 1950s furniture will be around forever, people prefer new and modern rather than old and sturdy. In addition, if you do buy from IKEA, the products are cheap and stylish and it?s probably the only store that will be able to fill your order quickly (even though you have to do the legwork yourself). Here?s a tip you?ll appreciate if you?ve ever gone the flatpack route? get a professional to do the assembly for you, it?ll be done quicker, to a better standard and they?ll probably have spares if any of the fittings are missing. And a tip within the tip is, if you?re buying at IKEA, ask around among the loading staff in the aisles whether they know anyone who does such assembly, some IKEA staff have side businesses doing just this.

Rental Assisted Tenants? In certain areas rentals predominantly go to such tenants. The only implications I've found is that the proportion of the rent paid by the council doesn't always come on the same day each month. However, if you have claimants screened in the usual way (as they have to make up the shortfall and be trusted to pay the assisted monies if it's paid directly to them), then you should be fine.

Remember to get references from the landlord PRIOR to the one they're about to leave as their current landlord might be glad to be rid of them and will provide a glowing reference in order to do so. Look for longevity in their past rental history. If they flit every few months it could be a bad sign. Don't be scared to consider such tenants. Most people don't enter a home in order to trash it, no matter who's paying the rent.

Renting Room by Room: If you do this, the property could be classified as an HMO (home in multiple occupation) if it?s let to 3 or more tenants who form two or more households and who share a kitchen, bathroom or toilet. Each council will have an HMO Officer and you can check with them if you?re unsure where your property stands. If it is so classified, as of April 2006, your property will need to be registered. This carries a fee and has requirements covering room square footage, kitchen food security (yes, really), fire system, fire escapes, etc. You also have to prove that you?re a ?fit and proper person? to hold the license. Even after the license is granted, running an HMO involves more management and might not be a route you want to go down. You might wonder, then, why anyone bothers with them. Well they can yield high income, you just have to weigh up the pros and cons.

When It Just Won?t Rent: If this is the case, you will want to look at other options such as:

? is the property suitable for conversion to self-contained flats (if they?re not self-contained, they still fall into HMO territory)
? is it best to sell up and buy something with higher yield in a higher demand area where, this time, you do your research first? See my article: ?Before You Buy-to-Let? on www.womeninpropertyinvestment.com

? Maria Davies, www.WomenInPropertyInvestment.com This article may be distributed or reproduced in full provided the above Copyright line is also included in full. Maria Davies has been a property investor since 1990. She freely admits that she's probably made every mistake in the book but she has learnt from them. Maria is a professional speaker whose specialist subjects are property investment and sales presenting.

North Cyprus: The Last Mediterranean Property Investment Hotspot

If only I'd had the foresight to buy an investment property in Spain, the South of France, Tuscany or in Malta twenty years ago when property prices were so cheap because the desirability of the destination had yet to enjoy exposure...if only...

Many people believe that the world's most beautiful locations are the countries in and around the Mediterranean Sea - think Spain, Malta, Turkey, Egypt, Sardinia, Italy, Morocco and Tunisia. All are nations synonymous with a fantastic climate, a wonderful quality of life, excellent cuisine, friendly and laid back people...naturally enough the Mediterranean countries are the most popular with those looking for a sun drenched holiday, a beautiful place to retire to or the perfect place to buy a property that will go up in value, be easy to rent and easy to resell. But many have already missed the affordability boat.

Properties on the most popular islands in the Mediterranean Sea and in the most desirable locations start from a quarter of a million pounds and go up to tens of millions. So the average property investor, second home seeker or retiree looking for an affordable place in the sun is going to be sadly disappointed then?

That is unless they discover the secret delights of Northern Cyprus?

North Cyprus is the secret and undiscovered third of the island of Cyprus that has been left untouched, unspoiled and unsullied by the greed of the 1970s and 1980s, it has escaped the overdevelopment and mass tourism of the 1990s and it has emerged in the new Millennium as a gem in an otherwise saturated, over priced market.

Properties in Northern Cyprus start from just GBP 60,000 for a duplex apartment in a resort on a championship golf course! North Cyprus truly is the very last Mediterranean property investment hotspot and it will not remain undiscovered for long. While the government are committed to preserving the beauty and culture of the island and determined to prevent it being overdeveloped and sullied, the properties that are being built sympathetically are catching the eye of international property investors, retirees, second homers and those looking to afford to start a brand new and exciting life in the sun.

The number of visitors coming to Cyprus is increasing rapidly; large international developers are discussing many projects from seven star hotels and luxurious resorts to more golf courses, marinas and even a furthering of the higher education establishments that North Cyprus is already famous for. Demand for property for sale and rent is coming from the large student base but more importantly it is coming from retiring Europeans, young families and couples, holiday makers, those needing a second home and even corporate investors.

Northern Cyprus property will not remain so affordable for so long - firstly the demand for property for sale is outstripping current supply and builders cannot keep up with demand, secondly prices are already increasing and finance is being made available privately broadening the numbers of those who will be able to enter the market. As demand soars and supply remains steady and restricted by the government's high standards, prices are rising and are going to keep on rising...making North Cyprus's property market one of the hottest in the world.If only I'd had the foresight to buy an investment property in Spain, the South of France, Tuscany or in Malta twenty years ago when property prices were so cheap because the desirability of the destination had yet to enjoy exposure...if only...

Many people believe that the world's most beautiful locations are the countries in and around the Mediterranean Sea - think Spain, Malta, Turkey, Egypt, Sardinia, Italy, Morocco and Tunisia. All are nations synonymous with a fantastic climate, a wonderful quality of life, excellent cuisine, friendly and laid back people...naturally enough the Mediterranean countries are the most popular with those looking for a sun drenched holiday, a beautiful place to retire to or the perfect place to buy a property that will go up in value, be easy to rent and easy to resell. But many have already missed the affordability boat.

Properties on the most popular islands in the Mediterranean Sea and in the most desirable locations start from a quarter of a million pounds and go up to tens of millions. So the average property investor, second home seeker or retiree looking for an affordable place in the sun is going to be sadly disappointed then?

That is unless they discover the secret delights of Northern Cyprus?

North Cyprus is the secret and undiscovered third of the island of Cyprus that has been left untouched, unspoiled and unsullied by the greed of the 1970s and 1980s, it has escaped the overdevelopment and mass tourism of the 1990s and it has emerged in the new Millennium as a gem in an otherwise saturated, over priced market.

Properties in Northern Cyprus start from just GBP 60,000 for a duplex apartment in a resort on a championship golf course! North Cyprus truly is the very last Mediterranean property investment hotspot and it will not remain undiscovered for long. While the government are committed to preserving the beauty and culture of the island and determined to prevent it being overdeveloped and sullied, the properties that are being built sympathetically are catching the eye of international property investors, retirees, second homers and those looking to afford to start a brand new and exciting life in the sun.

The number of visitors coming to Cyprus is increasing rapidly; large international developers are discussing many projects from seven star hotels and luxurious resorts to more golf courses, marinas and even a furthering of the higher education establishments that North Cyprus is already famous for. Demand for property for sale and rent is coming from the large student base but more importantly it is coming from retiring Europeans, young families and couples, holiday makers, those needing a second home and even corporate investors.

Northern Cyprus property will not remain so affordable for so long - firstly the demand for property for sale is outstripping current supply and builders cannot keep up with demand, secondly prices are already increasing and finance is being made available privately broadening the numbers of those who will be able to enter the market. As demand soars and supply remains steady and restricted by the government's high standards, prices are rising and are going to keep on rising...making North Cyprus's property market one of the hottest in the world.

Rhiannon Williamson writes about real estate investment in emerging markets worldwide and highlights property investment hotspots. To learn more about property for sale in North Cyprus click here.

Real Estate Investment Companies

Real estate investment companies acts as brokers and represents both buyers and sellers and create ideal opportunities for real estate investors. They represent clients in the sale, purchase, exchange and the finance of the real estate investment. Real estate investment companies are ideal for individual investors who want to take advantage of the real estate market but are unable to spend time on it. Most companies give personal attention and due importance to individual investors as they are their primary and most crucial segment of business.

The real estate investment companies deal with active brokers, a wide variety of investors, vendors, consultants and governmental agencies. Individuals can avoid many dangers associated with real estate investment by investing through companies as most companies employ personals that are trained to handle the pressure situations that often crop up in real estate investment. The investors who see the market clearly and make decisions based on the best evidence would get much profit from the real estate investment company. The investors can achieve the financial security and freedom which enables them to pursue other involvements.

Acquisitions, property management, due diligence, redevelopment, leasing, debt analysis and procurement, tax documentation, disposition analysis and detailed monthly reporting are some of the important services provided by real estate investment companies. Real estate investment companies are also referred as Real estate investment trust (REIT). Real estate investment companies have special federal tax treatment and must comply with certain tax requirements. There is a slight difference between Real estate investment companies and real estate investment trusts. For a company to become a real estate investment trust, it should share out 90 percent or more of its taxable income to its shareholders once in a year.

Before selecting a particular company, look whether they are registered under proper acts. Get as much information on a company from as many sources you can.

Real Estate Investments provides detailed information on Real Estate Investments, Real Estate Investment Trusts, Real Estate Investment Loans, Real Estate Investment Financing and more. Real Estate Investments is affiliated with Buying Investment Properties.

Real Estate Investments and How to Make Them

by: Milt Tanzer


Mistake # 1. Spending thousands of dollars buying books, tapes and attending seminars and then putting all of that information on a bookshelf and never looking at (or using) it.

Comment: I’m continually amazed at the number of “would be” investors who have spent a bundle of money attending seminars, getting an education and then never using it to start

their investment program. Not only is it a waste of thousand of dollars but it could be the

biggest financial mistake you can make.

Mistake # 2. Failure to learn the basics of real estate investing.

Comment: The other extreme to Number 1 above, are potential investors who realize real estate is the best way to accumulate wealth and venture into the purchase of properties without knowing the basics of real estate investing. Those investors are almost certain to get into financial trouble.

Mistake # 3. Fear of making a huge financial mistake

Comment: We all fear making mistakes, especially a large financial one. If you follow the advice in Number 2 above, you won’t have to worry about making a financial mistake.

Mistake # 4. Not looking at enough properties

Comment: Don’t fall in love with the first property you look at. Too many investors buy properties because they “look nice” or they are just to lazy to see what else is currently on the market that may be better. Part of sound real estate investing is in giving yourself a choice so you can select the best one, financially.

Mistake # 5. “A better deal may be just around the corner” syndrome

Comment: This is the opposite mistake of Number 4. This investor never starts his or her real estate investment program because they always hope a better deal may be out there somewhere

if they just wait...and wait...and wait.

Mistake # 6. Thinking that real estate investing is strictly a complicated game that only the wealthy can play.

Comment: First of all real estate is NOT complicated if you learn how to do it first.

Did you know that even professional investors use a simple nine step process to analyze the financial feasibility of an investment property?

Here's a brief idea of the nine simple steps they use in analyzing any type or size investment property.

A Basic Financial Property Analysis

1. Scheduled Gross Income (Income if 100% leased) = $ 26,000

2. Less: Allowance for vacancies (5% of Gross Income) -1,300

3. Operating Income before expense & Mtg. Pmts. $ 24,700

4. Less Operating Expenses (Taxes, insurance, utilities,

repairs and maintenance etc.) 40% - 9,846

5. Equals: Operating Income (Income before Mtg. Pmts.) $ 14,854

6. Minus: Mortgage Payments: -12,863

7. Equals Cash Flow 1,991 = 6%

8. Plus: Mortgage Principle Payment +1,697

9. Total Return: $ 3,688 = 10%

There's a lot more to it than that, but you just read the basic nine step procedure most professional investors use when analyzing any income producing investment property.

Mistake # 7. Falling in love with a property

Comment: Once you get your feet wet and become a real estate investor, you’ll wonder why you waited so long to begin. Now you’ll face another problem. Many investors fall in love with their property. They have seen how well it is doing, cash flow has been going up each year, and they have fallen in love with their tenants (not literally). Two big mistakes are made here.

First, never fool yourself into thinking your property is doing too well to sell or trade up because your cash flow is considerably higher than when you purchased the property.

The second part of mistake number 7 is getting so friendly with your tenants that you fail to maintain rental standards based on what the market will bear. This greatly hinders your growth potential. .

Mistake # 8. Failure to plan your financial goals

Comment: Before you purchase that first property, which, of course, you financially analyzed, determine what you expect from your investments…your financial goals.

It's known as "The 'time vs. money’" concept. The more you have of one the less you need of the other in order to reach your financial goals.

Mistake # 9. Trying to purchase properties that the seller is not motivated to sell

Comment: I’ve seen potential buyers continually try to purchase investment properties that

are not really on the market. This includes property owners with the attitude that “Sure, it’s for sale… for a price”. Unfortunately the ‘for a price’ part usually means it will make no financial sense for a buyer.

Mistake # 10. Believing you can get rich quick overnight with no money invested of your own.

Comment:. Getting rich overnight will not happen . . . (regardless of what some of the so

called "experts" tell you). It takes some time, effort and knowledge of real estate investing to do

it with minimum financial risk.

The important thing to remember is that YOU can do it, too. You can join the millions of investors who create sizable incomes by investing in real estate.

Mistake # 11. No money down investing usually isn’t.

Comment: Somewhere, somehow there will be some money required to put a transaction together and make it profitable.

It may be closing costs, repairs or upgrading, whatever. But somewhere, some money will be needed. There are ways around this problem without getting into a high risk situation. You may be able to finance every dollar you need, but it can come back to haunt you in the form

of mortgage payments you cannot afford to make. Again, learn what you are doing first.

Mistake # 12. Not financially analyzing a potential investment property.

Comment: This is the most serious mistake an investor, or potential investor, can make. I've seen a few pros in the business rely on a "worthless and inaccurate" rule of thumb to make a huge financial decision to purchase, with total disregard for how well the property will perform.

Oh, yes, there is one more major mistake many investor make:

Mistake # 13. Thinking it's important to pay off your mortgage as soon as you can

because mortgages are a 'necessary evil'.

Comment: First of all as a real estate investor, mortgages are good and not a necessary evil. You must learn why this is true. You must learn how, in the right situation, a second or third mortgage can be a good thing.

Second: mortgages are one of the keys to creating wealth in real estate. You must learn how to use financing as one of the keys to creating your own financial estate, without concern for it being "risky".


About The Author
Milt Tanzer has been a Commercial/Investment real estate broker and investor for over 25 years. Author of 7 books on real estate investing. Gave seminars to both the general public plus Realtor Association meetings for several years. Published by Prentice Hall division of Penguin Putnam.

Websites:
http://www.investmentre.com
http://www.realestate-supermarket.com