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Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investment Risks Part 2
Real estate investment isn't easy - by anyone's standards. But the potential
profits always seem to make it worthwhile. There are many concerns, however,
such as insurance rates, interest rates, legal concerns, security, and more.
A real estate investor - a successful real estate investor, must be able
to manage the risks associated with their investments.
The first rule of real estate investment risk management is having and using
good common sense. Of course, information is very powerful, and when you
make it your business to gather as much information about your investment,
including the market that surrounds your investment, you will be better able
to manage and reduce your risks.
A savvy real estate investor will study the market in the area that they
plan to invest. They won't just look at the property. They will look at the
neighborhood, and then work their way out, until they have researched the
entire area. They will look at new home construction, home sales, employment
opportunities, recreational opportunies, and more. They will compare one
property with similar properties in an area, and make it a point to talk
to other property owners in the area as well.
Before investing in undeveloped land, or building a commercial interest on
undeveloped land, a good real estate investor will look at other commercial
interests in the area, competition, and the demand for the space, as well
as potential businesses that may use that space. They will also learn about
environmental laws in that particular area, as well as zoning laws.
A good real estate investor will not only ensure that they have the funds
set aside to cover insurance, but also enough to cover several mortgage payments
on the property. How far in advance you want to pay the mortgage depends
on what you intend to do with the property, and how long you plan to hold
onto it. While you want to put as much money as possible down on a property,
you also need to put enough back to cover your costs for a specified period
of time as well.
For the most success, avoid adjustable rate mortgages, and invest when the
rates are low. Real estate investing can be risky, but an ARM (adjustable
rate mortgage) makes it more risky, because the rates can rise dramatically,
which can increase your mortgage payments to levels that you are not prepared
for. Interest rates often rise very fast, but they fall at a much slower
rate!
If you already have an adjustable rate mortgage, you may want to consider
refinancing and getting a fixed rate mortgage, or selling the property while
the rates are still low, and the market is high. You need to preserve your
investment capital as much as possible - and if you are having to spend it
on rising interest rates, with an ARM, you aren't preserving it!
Sometimes, mortgage lenders will actually offer more than the value of a
property when financing. Do not take advantage of this, unless you have a
plan for using the extra funds, such as remodeling and raising the value
of the property to more than is borrowed.
Good real estate investors always look at several different services before
settling on one. For instance, you don't have to use a particular title company.
There are several to choose from, and you can shop around to the one that
has the lowest fees. The same is true for other professionals that you may
have need of when it comes to real estate investments, such as lawyers,
accountants, and even contractors.
Many savvy investors find partners, and form limited partnerships. They may
even incorporate, which allows them to keep their personal assets separate
from their business assets in case of loss. By partnering, they are able
to share costs and expenses with someone else, which makes investing easier.
Of course, you must realize that when you share costs, you also have to share
profits.
The most important thing to remember when it come to real estate investment
risk is that there will always be risk, no matter how careful you are, or
how much you do to manage that risk. It can be reduced, but it never goes
completely away!
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Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
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