Tuesday, December 18, 2012

How to Get Rich - Learn the Top Real Estate Rule

Do you know the most important Real Estate rule ?

Do you think the rich neglect to use this rule ?

Chances are you probably don't and no they never neglect this rule !

Number One Rule 

The number one rule for buying real estate is not how much you pay or how much you can charge for rent, although these are very important too. The number one factor to consider when buying any Real Estate is location. Whether you are buying your personal residence or an income property, location should always be the number one factor to consider.

The reason is actually quite simple. Location is pretty much the only thing that you cannot change. You can renovate this or renovate that in order to increase your rent or the value of the asset. But if you buy a property in a bad area, there will be nothing you can do to increase your value. You will be stuck with it and chances are you will lose money.

How to Avoid the Mistake

Many newcomers to Real Estate investing do make the mistake of buying in the wrong areas. They are usually so excited about getting into Real Estate that they forget to do their homework. Yes, homework.

To avoid buying in the wrong areas you need to do your research. You should never just look at the cheapest thing you can buy. There is usually a very good reason the property is so cheap. Location usually topping the list.

One important fact to research if you are buying an income property is the crime rate of a given area. No matter how rich or poor a potential tenant is, nobody will want to live in a high crime area. For a personal residence, crime is also very important. Safety for yourself and/or your tenants should always take priority.

Two other important facts to research are the true value of the property and the potential for growth in the area.

You must look for areas that have a reasonable expectation for future growth. There must be a reason why people would want to move into the area. Future development, close to good jobs, good transportation, etc.

You must also make sure never to pay more than the current worth of the property if you were to sell it today. Never fall in love with a property or an area to the point where you pay too much. Some day you may want to sell the property and you have to make a profit. That's the whole point of investing.

Really That Important

Yes, location is really that important ! In fact it is so important that many real estate seminars list the top three factors for buying rel estate as location, location, location.

As I mentioned earlier, location is the one thing you cannot change about your property. You will be stuck with it, so you had better do your research before making your offer. Otherwise, you could have a very short Real Estate investment career.

Life really is all about the choices that you make. Choose well.

As always, I welcome your comments and suggestions for future topics.

1 comment:

Toby Cook said...

To my mind, if you want to create wealth in real estate, you need to think like rich people think. I am impressed with the way you have put your points here.
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