Jeff Adams Risk reducing tips for real estate investing

It is a fact that the fear of losing money can prevent a lot of people from investing in the real estate. And this is definitely a valid concern. The real estate investment, like any other form of investment must be speculative and it can become risky if proper analysis of the market is not done. But, at the same time, experienced real estate investors can develop certain strategies for minimizing the risk.

You need to make certain investments on which you can break even. The new investors might not have the proper expertise, but this article will definitely help you in reducing the risk of real estate investing.

The first thing that you should do if you are new in the real estate market, is not to quit your job before you make certain profits by one or two initial real estate investments. It might become troublesome initially to maintain both a full time job and real estate investments, but do not be in a hurry to quit your job.

The security of a steady income is really important in a person’s life for having a good night’s sleep. And more importantly, a successful real estate investing needs important decisions which can be taken in calm mind. So, if you have a job as backup, you won’t take up any hasty decisions out of panic or need for money.

Get a good accountant. It is necessary in a real estate business to undergo a lot of paperwork, calculations and tax implications. This is the reason, a serious real estate investor needs to have professional accountant. An accountant, who has specialized in real estate tax law, can help you in finding out ways for earning more profit or avoid any costly penalties. Make sure to select a real estate accountant with years of experience.

Do not overcapitalize. According to Jeff Adams, this is one of the most common mistakes that a lot of real estate traders make. Do not spend money on a huge extent on the property that may not be able to provide you desired profit when it is sold. For instance, rehabbing and reselling the houses is definitely an investment method which seems profitable.

But you need to analyze the condition of real estate market and the total expenses that will be involved in fixing the property. Do not put on a lot of money and heart on the repairs and improvements. But ultimately it might prove to be overcapitalizing if you are unable to resell the house at high price for making profit.

Do not rely only on the market. One of the most important real estate investing tips is, it is better to consider the market fluctuations, but do not depend on market appreciation for making an investment profitable. The real estate is influenced by such factors which are completely beyond your control like the population growth, interest rates, major employers who are moving in or out of the area, etc. Thus, always plan for a worst case scenario.

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