Real Estate Tips For Landlords

Most "guru's" are currently spouting about how good real estate investments can be. This article won't seek to reinforce their sales pitch, nor will it argue with it. Real Estate can be a great investment, but if you not careful it can also be a financial disaster.

You may ask who I am to speak on real estate. Whilst not a multi-millionaire selling my next great book this article can give you some practical advice of someone who rented out for over five years and explain the pitfalls and the success stories.

Important Lessons:-

1) Good Insurance:- number one is not an option - its a necessity. Ensure your asset is fully insure both normal house insurance and extras like tenant damage and loss of rental income. Given a disastrous tenant this can lessen the pain. Be WARN! Don't under insure your house, if it burns down, particularly if there is any suspicion of arson the insurance company will do their own independent investigation and here is the real kicker - THEY WILL CHARGE YOU FOR THE PRIVILEGE - thats right, read the fine print, the insurance company before paying you out will minus their costs - i.e. $100,000 policy - $20,000 investigation means only $80,000 to you. Read the fine print, the insurance despite their ads is not your friend if a million dollar house and therefore a million dollars on the line, don't expect the insurance company to be happy to pay out, if they can find a way to slime out of the policy they probably will. An insurance policy is a contact make sure you read it. Make sure you chose an insurance policy not just on price but also on good reputation and on company strength.

2) A bargain isn't always a bargain:- When purchasing a house remember to be very careful. Don't buy on emotion. Never buy without visiting it several times on different days and times. I know of a nice suburb that has nice houses with big yards, but the smell of the local slaughter house is enough to make you want to vomit. Remember you only become aware of such things by visiting the house personally. Go at least one time without the real estate agent, speak to the neighbours and ask if they like living there. When buying a fix it upper check how easy it is to fix up. Does it contain asbestos, lead paint or like harmful products that are going to cost you a fortune to remove? Would you like to live there? If you don't then don't expect others to. Remember whilst more expensive houses may cost more they tend to attract better class of tenants and less maintenance costs as well as higher rental returns. Remember there are always more houses out there it the buyer is stuck on a price thats no good for you, don't be afraid to walk away. Never buy a house on emotion!

3) Do it yourself:- Unless you have a huge portfolio of real estate under your control try to do it yourself and you will save a lot more. If you engage a real esate agent to rent your house they will charge between 10%-15% of the rental income, in return you get very little. They will rent out the house, may inspect once or twice a year (some agents will charge extra for this privilege) and you don't have the choice of the tenants. Do it yourself and save the money. Pay a small fee to join online real estate black list - (this is a list that blacklists bad tenants) and you are in the same position as them. A real estate first goal is not to please you but to ensure they get their cut - this may mean they make decisions that are not in your best interest, but in theirs (e.g. they may get kick backs from their tradesman and other relationships - in my case they repaired a hot water cylinder without my permission - the cylinder was less than a year old and still under warranty - thus I could of got it repaired for free, was I angry - you bet). Don't forget with agents its your house, if they are not keeping you satisfied, change agents. In regards to maintenance tradesman are hugely expensive, whatever you can do yourself, do. For example, changing a tap washer is an easy thing to do, some plumbers charge $100 just to pay a visit.