Thursday, September
9 2010
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Thursday, September
9 2010
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Announcing a new acquisition!!
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What's New at Forte for the year 2007 August 2007 - An All-Weather Strategy to Real Estate Investing By Forte News Department Despite
some positive stirrings in real estate in various parts of the country, it’s
wise to take cautious steps when strolling back into the investment property
market that was so overheated just a couple of years ago. A good
first step is consulting with a tax or financial adviser, such as a CERTIFIED FINANCIAL PLANNER™ professional, who can help you
assess your own financial situation before you begin. Getting your own
financial house in order first is critical. Some
thoughts: Remember that real estate investment
is part of an overall financial plan. Investing in real estate requires specific tax, spending,
budgeting and people management advice. Based on your other assets and your
overall financial plan, investment property might be a worthy goal, but only if
it fits your investment strategy and if you’re willing to put the time and
effort into creating a successful business. Don’t spend until you study: If you don’t have an intimate
knowledge of neighborhoods, rental rates, commercial traffic or any of a dozen
more factors that make real estate investments a particular success in one
community and not in others, don’t even start. The most successful people in
real estate investment have taken the time to learn about the properties
they’re buying, sensible ways to borrow and economical ways to manage the
buildings they have. Make sure you
assemble a good advisory team around you starting with your financial planner,
your tax adviser and an attorney knowledgeable about real estate transactions.
They’ll teach you and keep you from making serious mistakes. A slower market doesn’t mean a
bargain market. Even
though the gains of the past 15 years aren’t what they used to be, keep in mind
many sellers aren’t terribly desperate to sell and they’re not dropping their
prices all that much. Make sure you take the time to study a particular market
not only for gains in price, but for stability in rent and overall quality of
the property and neighborhood you’re examining. You might hear about a downtrodden neighborhood ready to “turn,”
but that rotation might take years – start slow and pick properties with the
best chance of appreciation. Home ownership is not real estate
investment. If
you’re thinking about leapfrogging from one residence to a new one in hopes of
huge gains when the market returns, give yourself a reality check. An
investment is something you can sell when the moment is right without any
hesitation. Is that something you can really do with a home you’ve grown
comfortable in? When the market goes up or down, we don’t necessarily think of
dumping our principal residence. There are emotional ties as well as physical
ties to a home – whereas real estate bought as an investment must produce
income during ownership or a profit at the time of sale without exception. Real estate is not an automatic
ticket out of financial trouble. Some people have gambled their way out of debt by buying
distressed properties and reselling them at a profit. They’re the lucky ones –
and after hearing so much about the “flipping” phenomenon, many of those success
stories might be apocryphal. Be aware of your risk tolerance at all times. Enter the foreclosure market
carefully. With all
the reports of subprime borrowers losing their homes in recent months, don’t
think those foreclosure numbers will automatically provide you with a
can’t-miss opportunity in real estate. Taking advantage of the foreclosure
market is both a learning exercise and an emotional one. It takes time to learn
all the correct avenues in a community toward investing successfully in failed
properties, and actual contact with families losing their homes can be
wrenching even if you do know what you’re doing. Foreclosure and pre-foreclosure investing is not for the
faint-hearted. Cash is king. During the white-hot real estate
market, people were buying and selling property for little or no money down
because lenders were willing to take that risk. Today, in a higher rate
environment, that’s definitely changed. While many successful real estate
investors choreograph borrowing seamlessly into their strategy, cash is an
important decision for down payments and covering ongoing expenses. This is
where your advisory team comes in. Keep your credit report clean: Only borrowers with the highest
credit scores will find the best lending deals if they need to borrow. Make
sure your credit report is clean before you enter the market. August 2007 — This column is produced
by the Financial Planning Association, the membership organization for the
financial planning community, and is provided by David W. Henion, a local
member of FPA | ||||||||||||||
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