7 Tips to make the most money from investment Real Estate
7 Tips to make the most money from investment Real Estate
Monitor your Investment Portfolio
The primary motive for real estate investing, of course, is the money. Wealth is the essential reason why people invest in real estate, and typically the first thing people think of when they consider owning investment real estate.
One of the advantages of owning income-producing property is the considerable income generated from rent when a property is purchased and then subsequently managed correctly. If a real estate investor doesn't overpay for a property, keeps expenses down, the property rented, and the building well maintained, a real estate investment can generally make the investor money, even while they are sleeping!
Notwithstanding, there are factors that can cause a real estate investment to lose value. Moreover, it can have a drastic effect upon the rental income property's ability to generate profitability, despite the investor's efforts.
Okay, let's look at undoubtedly the seven worst contributors to the deterioration of rental property value.
1. Declining Neighborhood
The community surrounding the income producing investment property can change in a variety of ways that can adversely affect your investment property. Increasing vacancy, for instance, can lead to reduced rents, which in turn means reduced maintenance causing building deterioration, in turn causing the whole neighborhood to slip into decline and therein triggering a domino effect that simply compounds the problem.
The nearby construction of facilities such as prisons, sewer treatment plants, and airports will also likely have an adverse effect on the area. Also, perhaps more subtle and slower in coming, is a decline due to increased crime, perhaps resulting from an adjoining neighborhood spill over.
2. Impact of Adverse Infrastructure
The impact of being directly under the flight path of airplanes, construction of a major highway or intersection can limit access to the property, cause noise and dirt by the construction and all this can have a negative impact on the property's ability to attract and keep tenants. The end result may be an increase in your investment real estate value, but construction and major works can take up to a year or more and during that time you could expect your property investment value to drop.
3. Regulatory controls
Governmental controls and regulatory changes to zoning can adversely impact real estate investment properties. Real Estate investors that purchase raw land for development, for instance, can see their plans grind to a halt because of a building moratorium or anti-development sentiment. All of which results in downturn in value.
4. Wear and Tear
Whether its electrical wiring, hot water systems, plumbing, paint or floor coverings, sooner or later it will require maintenance and/or replacement.Obsolete fittings and fixtures can reduce the value of your investment property if they are not properly maintained.
5. Supply and Demand
Two major factors of supply and demand cause real estate values to go down.
a) The first is oversupply. For example an oversupply of units is when there are more units available to rent than there are tenants to rent the units. In this case, the market can decrease quickly and stay down for a long time because there is a glut on the market.
b) The second is Tight Money. This means less availability of long-term financing from lenders and therefore less qualified buyers for your rental property if you decide to sell.
6. Poor or no maintenance
A run-down property in the neighborhood, if left unchecked, could drive down the values of all adjoining properties. A deteriorating property, whatever the reason, will have an adverse effect on your real estate investment.
7. Pressure to sell
Highly motivated sellers may reduce a property to a bargain basement price and smart investors watch for property owners who must sell to take advantage of the owner's strong motivation to quit the property. Always try to avoid ever reaching the moment when you are forced to sell.
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