Tips for Building Wealth with Real Estate

 

Have you ever wondered how some people are able to create wealth by making great real estate imvestments?

 

HONOLULU ADVERTISER   December 9, 2007

 

BY LISA SCONTRAS

 

Custom Publishing Group

 

Have you ever wondered how some people are able to create wealth by making great real estate investments? How do they know where and when to buy? Isn’t it all luck anyway?

 

 

Of course a little luck always helps but solid investment strategy starts with sound advice from the experts.

 

The 11 Techniques for Building Wealth in Real Estate are one of many tips and tools developed at Prudential Locations and listed at prudentiallocations.com. The Web site is aimed at helping everyone make smarter real estate decisions.

 

It’s never too late to start your portfolio or to improve your financial future. And according to Marshall Mower, Prudential Realtor and partner, anyone can learn how to build wealth with real estate.

 

“Even if you are not an astute real estate investor, with the right guidance and advice, and with some patience, you can make great real estate investments and enjoy the benefits over your entire lifetime” he says.

 

- Real estate investing offers you the most tried and true way to build wealth. Unlike stocks, it is something that you can see, touch and make changes to and update.

 

Mower recommends diversifying your portfolio with a mix of different types of real estate investments, along with stocks, bonds and other commodities. But he points out that buying real estate has some distinct advantages over other forms of investments. Investors like real estate because it can be purchased with little or no money down.

 

“While a typical down payment on a real estate investment is 20 percent, it takes a 100 percent down payment when you buy stocks,” he says. “Additionally, there is potential for appreciation in value, real estate investments can provide monthly income, are depreciable for tax purposes and can eventually be used as a residence.”

 

- Get your finances in shape.

 

- Get your credit ready for mortgage financing. Mortgage credit differs from consumer credit.

 

- If you don’t already own a home, start by buying a home that you will live in.

 

“Whether you rent or own real estate, you are paying a mortgage,” asserts Mower. “The question is: Are you paying your own mortgage or your landlords? You’ve got to get into the game. In order to win, you’ve got to play.”

 

Real estate has a widespread appeal, according to Mower because unlike many investment vehicles, which have values that can change overnight, appreciation and depreciation in real estate values usually occur gradually so that you can endure market corrections without losing a fortune.

 

“Like a tortoise, real estate should be considered a ‘slow and steady’ investment purchased for the long term,” he says. “While fortunes can be made overnight in real estate, most people who succeed have a long-term view.”

 

- Know your time horizon. The longer you plan on owning the property, the more you’ll probably need to invest in maintenance, repairs and improvements.

 

- Determine where you want to invest. It’s always good to start investing in an area that you are familiar with and that you can watch over.

 

- Develop a network of landlords, agents, other investors, etc. It’s good to be in contact with people that might give you information on your next deal.

 

Find a mentor in a Realtor, a landlord or someone you know who owns multiple properties.

 

“In general, most of the ‘great buys’ or ‘steals’ are snatched up by savvy investors that have their finger on the pulse of the real estate market,” adds Mower. “Realtors often know which neighborhoods are ‘sleepers’, which are overheated and inflated, and which are poised to deflate.”

 

- Buy right. Don’t overpay for deals that sound too good to be true. Most likely they are.

 

- Though your rental income may not completely cover the mortgage payments, don’t fret. Over the long-term, the negative cash flow will turn positive. Just don’t go in over your head. Know how much of a negative you can handle.

 

- Take equity from a current property by refinancing or use a 1031 tax deferred exchange in order to acquire more real estate investments and further build your portfolio.

 

“Leveraging the equity you currently have in one property to acquire more real estate is a common strategy used by seasoned real estate investors,” says Mower.

 

- Make sure your plans are profitable. Look at rental income and review long-term appreciation rates on the property. You want to evaluate your potential investment to make sure it’s a good one.

 

Mower suggests finding a reputable and knowledgeable Realtor who has your best long-term interest in mind to give you guidance, advice and get you started.

 

For more million-dollar techniques, go to www.prudentiallocations.com and click on “Get Smart Home Buying Tips from the Pros.”

 

 

 

 

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