Making an investment in Real Estate looks little scary, but if done with utmost care, will become a good investment. Those who set back due to the risk factors involved in real estate business, can check it out the below steps that will cut down the risk involved in real estate investment.
Go with a right choice of house
It is always recommended to give priority to the location, while purchasing a house. Apart from giving importance to review the basic amenities and neighbourhoods, you should also focus on the following aspects.
- The cost of the house “as is” condition
- Rental value of the house
- Estimated cost if it is fixed
- Final cost if it is fixed
These four leverages will help to make wise investment decisions.
Make use of right financing
It’s better to buy houses without involving banks as it reduces risk. Generally, people get a loan and gives full-recourse right to bank through a personal guarantee for handing over future rent with rent assignments that finally makes their assets at risk in case something goes wrong.
Identify your house
Buyers have to beware while purchasing a distressed real estate which generally comes for sale as such with nasty things. There may be lead-based paint, structural damages, faults in wiring, roofs, oil tanks and so on, which they must accept as such with the house. Risk can be reduced by arranging for a home inspection by a certified home inspector or licensed contractor.
Understand your Boundaries
To avoid future surprises regarding the boundaries of your property, it is best to go for a survey done by a licensed surveyor. This helps you to get rid of boundaries risk and can avoid encroachments into nearby property
Rely on Professional Experts
Your team of real estate must include highly talented crew of a good attorney, contractor, property manager and realtor. If you try to cut down costs on real estate team, your investment plan can become complicated. You should build a great team that provides you with guidance from acquisition through renovations and stand with your property management for a long term.
Defense from history
Buying foreclosure will offer more benefits for long-term cash flow. On the other hand, the investor must ensure that the title is insurable and clear. The buyer must beware as in certain cases the title can be insurable with a less perfect title, which leads to risk of their equity position in a property. So, they must get help from a title company to ensure title is both insurable and clear.
Defense for the future
It is unlikely that you may forget your insurance, if you have purchased houses with bank mortgages. After making a cash purchase of a house, if you forget to insure, in case of any fire accidents, you may be forced to loss entire investment. So, practice to have proper insurance and additional liability coverage for your real estate investments. This helps you to escape from the case sue upon you as a landlord by your tenant if he or she gets hurt.
Safeguard yourself from Copper bandits
Copper bandits are those thieves whose target are vacant homes where they crawl under homes and involve in vandalising the condenser to get the copper apart from seizing entire copper pipes. They will make money out of selling it to the local recycling plant. To escape from these risk, you better lock your beneath home space access panel, fence your outdoor condenser with a conceal.
Stay safe from the thieves
Vacant homes are easily prone to thieves attack and to avoid solid deadbolt locks as it is hard to open. Keeping interior lights, playing a talk radio even though you are out, make the thieves feel there is activity happening inside the house.