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Have a Working Knowlege of Real Estate February 26, 2008

Posted by minnesotarealty in Minnesota MLS Listings.
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A lot of people want to be mystified. The arts mystify them, so they gasp with pleasure and congratulate the artist on his natural talent. Science mystifies them, so they don’t even wonder about what scientists are actually up to.  MN real estate is mystifying to them, so they assume it’s just a big lottery and that certain people either are very lucky, or that they possess an inborn gift.

They are unwilling to accept that succeeding in these disciplines and most others is simply contingent on formulating a series of steps and following through on your plan. Anyone who reads the Rich Dad, Poor Dad series by Robert Kiyosaki will realize that, in the real estate investing game, there are five key steps the serious real estate investor should follow in order to achieve success. An investor must:

1.Understand the language of real estate investment. This means to have a working knowledge of basic accounting and finance and know how to read financial statements. These skills give you the ability to determine whether a property is assets and potential drains. It is also vital to know the basics of real estate and tax law, not only so that you do not make costly mistakes, but also to know where the great tax deductions for real estate are. Understanding the basics of these subjects will also make it possible for the investor to know what questions to ask his lawyers and accountants upon hiring them, and to grasp the significance of what they tell him.

2.Keep experts close at hand. This is all about networking and studying the people who may wind up on the MN MLS real estate listings team of experts which he will hire to assist him in the location and evaluation of real estate. The smart investor will familiarize himself with the real estate investment community in the city in which he plans to invest his money, thereby familiarizing himself with the city.

3.Study the market consistently. The investor should read up on various cities and learn what the experts say in their regard, but also take a look at them himself. He should study his home city twice as thoroughly, if that is the place he is looking to invest his funds. The investor should get to know economic factors and learn which areas are good news, and which are bad news. He should learn what the rents in his marker and decide if a property located in that part of town would help him reach his goals. He should personally visit as many properties as possible with his team of experts, even if he is not prepared to make a purchase.

4.The investor should know the right and wrong way to negotiate . Many have incorrect notions regarding negotiation. These people are under the impression that the purpose of each and every negotiation is to close the deal no matter what, and to strong-arm the seller into ensure all of the information about the piece of property is out in the open. If it turns out that the purchaser can make the relevant numbers add up in his favor, and the seller will accommodate his terms of sale, then the investor should go ahead and purchase the piece of property. If these conditions are not met, the investor should walk away from the deal. According to Ken McElroy, writer of “The ABCs of Real Estate Investing,” the investor should go into every negotiation assuming he will walk away in the end.

5. Nurture your property. This comprises just what you’d expect. Conduct the necessary repairs and improvements on the property and get the empty units filled. Ensure that renters’ wants and needs are addressed.

This is a simplification of the long road to real estate investment success, however these five simple steps show that real estate investment is a process which can be learned by anyone. There really isn’t a thing magical or mysterious about it.

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What Kind Of MN Investment Property Is Best For You? February 11, 2008

Posted by minnesotarealty in MN Realty.
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Part of learning how to invest in Minnesota real estate is figuring out what type of property to look for. There are many different choices. The investor can purchase houses, duplexes, condominiums or apartment buildings – and that’s just the beginning. He/she can purchase lots and build investment property or buy lots and rent them out to people who build on them. They can make “in really good condition” a part of their research criteria, or he/she can look for something that seems to be in rougher condition than it is, in order to get a good deal. They can hunt for properties with absentee owners in the hope that he/she finds someone who’s hoping to put their property out of their mind so that they can just be rid of it.

There are many possibilities. The question is, which property is the right property for you?

Ultimately, the best investment property is the one that will make the most money while costing the least amount to get up to speed and run. Getting a property ready to rent may involve renovation to bring a building up to code – adding up-to-date appliances and so on. It might involve a new coat of paint, or even getting rid of some unwanted tenants. What the potential new owner has to determine is, if the building’s problems are fixable.

For example, in his book “The ABCs of Investing,” Ken McElroy writes about someone who purchased a building without ever viewing the site, and found himself stuck with some tenants who were not just bad. These people were dangerous. The property was in a poor area of town in which the owner should never have purchased a property. When he finally got around to hiring Ken’s property management company, he had lost a bunch of potential income due to delinquency.

McElroy’s team repaired what they could. They got rid of the undesirable tenants and contracted for the building, but they could do nothing about the quality of the neighborhood. The building would never be one that people with a lot of choices would choose to live it, simply based on its location. It would never get the rent that it could have if it had simply been situated somewhere else. Most of the building’s problems were simply unfixable.

The well known saying, “Location, location, location” is important for a reason. Location may be the single biggest factor the Minnesota real estate investor needs to think about when checking out potential properties to invest in.

Besides basic viability, the investor needs to think about how they want to manage their properties. McElroy advises investors to hire a property management company for the experience and to free the real estate investor to search for additional investments, but some investors just prefer managing their property by themselves. That type of investor might want to think about buying something that is small enough to manage on his/her own. Other investors are unwilling having partners or investors and will be restricted by that as well. In that case, smaller and less expensive is usually the best option for them.

In the end, Mr. McElroy also recommends the investor not assume that he/she should start small. If they have learned enough to invest in the 1st, he/she can learn how to use OPM (other peoples’ money). They should remember, however, what they are comfortable doing – or what they would regard as the most enjoyable way to move forward. The opportunities are nearly endless.