Buying an investment property is a proven investment strategy in the business world but not touted in many financial planning and investment magazines. You don’t hear about it from Wall Street says National Realty investment advisors spokesperson Dan Hirshout – “because it’ll make any money on single-family residential rentals – but you can turn a significant profit, opines National Realty Investment Advisors. This New Jersey-based firm deals mostly with real estate investment properties in Philadelphia, Pennsylvania. As the number six city and Metro market in the United States, Philadelphia provides numerous opportunities for people who want to build substantial wealth portfolios -including a 10 year property tax abatement. The art of real estate investment requires a lot of hard work and commitment if you try to do it yourself but the rewards can be satisfying. In order to turn a successful profit in this venture, it is wise to adhere to the following guidelines – if you are not using professional real estate investment management:
The first thing that a real estate investor should consider is location. National Realty Investment Advisors cannot stress enough the importance of finding the best address for an investment property. When buying a property that will be used solely for investment, there are many different factors to consider than if it was an address being purchased only for personal residence. Investors will want to look at the surrounding area and determine if the property is located near major colleges, employment hubs, public transportation centers, nightlife, entertainment and shopping. The kind of rental environment the property is surrounded by is an important help.
Because economic times are tough, and banks are paying near zero interest on deposits, many people are getting involved with rental real estate to increase their revenue. To get the highest rent, the property must be in a rentable state. Therefore an assessment of the repairs necessary in purchasing the property and renovating it must be made. A complete renovation budget must be developed by the contractors involved. Then financing of that budget must be examined along with the purchase of the property. If the property is not up to proper rental status top rents will not be obtained. However, a common mistake made by amateur real estate investors is spending too much money in improving their first property. While the property should be maintained and kept at a high level of quality, that does not necessitate the wrong choice of fixtures and amenities. National Realty Investment Advisors believes that investors should pick the right finishes and features of their property to renovate that will increase rent in May tenants happy but will not break their budget and make the investment unprofitable.
National Realty Investment Advisors indicates that, like with any business venture, it takes time to generate revenue. Entrepreneurs realize that they will not see a profit immediately and that they have to be patient if they want to see a return. The same practice applies to real estate investment. People who own properties will want to think long-term about their investments. Real estate is not instantly liquid. Today’s housing market does fluctuate within small ranges, so rent to cost ratios must carefully be studied as well as resale value opportunity. There are numerous benefits to long-term property investments such as positive cash flow, sheltered by tax benefits and the tenant paying off your mortgage. Within a few years, if multiple properties are carefully added to the portfolio in a controlled manner it may be possible to make enough income to turn property investment into a full-time career.
National Realty Investment Advisors encourages property investors to look for value when choosing their assets. Property owners are more likely to see a better return on their investment if they are willing to purchase a fixer-upper and put forth a little elbow grease. There are still thousands of properties around the country that are available (although the quantity of distressed real estate stock is way down from the crisis) and that have the opportunity to have their prices appreciated from renovation. In some instances, a fresh coat of paint or some small touchups can help investors increase the rent of their property.
With any business venture, it is wise to be surrounded by professionals in the industry. Property investors should make sure that they are associating with contractors and handymen who are skilled in their craft. It is also important to have a reliable electrician, plumber, and HVAC contractor on standby to take care of overlooked problems in rental properties. Property owners should do annual checks of their units to avoid a large scale disaster and to take care of small problems before they escalate. National Realty Investment Advisors encourages owners to do the appropriate research and to find out how much certain tasks cost.
It is crucial to screen all tenants. Many property investors have lost out on revenue because they did not properly screen their tenants before they moved in. A good rule of thumb is to run a credit report on every applicant to ensure that they are reliable and can pay their bills on time. Additionally a criminal background check and the previous landlord credit confirmation must be conducted. Evictions can be a costly ordeal, and the best way to prevent this from happening is to make sure all tenants are credible ahead of time.
Property investors need to recognize their rights as landlords. National Realty Investment Advisors urges investors to get a referral for a competent real estate attorney who specializes in evictions and disputes. Some tenants will do all in their power to take advantage of their rental property and may look for legal loopholes. A landlord should protect him or herself to make sure that they are not being cheated out of money.
National Realty Investment Advisors Encourages Hiring an Accountant
As mentioned previously, there are numerous advantages to having a long-term investment property. With the right practices and procedures, an investor can over time become a full-time landlord and rely solely on the assets from their properties to sustain their lifestyle. The best course of action is to hire a respectable accountant. This person will help manage important financial options, especially when it comes to tax accounting.
“You should never neglect an investment property that you own and manage yourself. It is an important obligation and the more assets that you acquire, the more work that you must put forth. If you have to do it yourself, you should start out by managing one or two properties at first. If you do well over a couple of years, then you can start expanding your portfolio. However, it is a good idea to hire professional real estate investment management work for you so that you are not overwhelmed,” advises AJ Scutaro an associate from National Realty Investment Advisors. “Our system” he continued, “pays for itself and multiple dividends to our busy investors”.