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Need a property expert? Look
in the mirror
Dear Steve:
What kind of professional can give me advice about whether a particular piece of real estate is worth purchasing as an investment
property? I know who to turn to for advice about buying stocks, but
I'd like professional advice regarding a piece of property.
Mentor Me
Dear Mentor:
Real estate experts are a little like "for-sale"
signs. There's one in every neighborhood.
True, there are plenty of professionals you can talk
to: real estate agents, brokers, developers, appraisers, investment advisers,
etc. And there's no shortage of seminars and courses headed by real
estate investment gurus who will tell you how they became wealthy
and how you could, too, in just a few short months. Just open up
your pocketbook and say, "Ahh."
One of the most upfront guys in the industry, the
self-fashioned "anti-guru," John T. Reed, rates such seminars
and courses on his Web site, johntreed.com.
The cryptic Reed doles out a lot of free advice there with entries
such as "The Real Estate B.S. Artist Detection Checklist."
But you might just want to turn to the person you
trust best for advice -- and that's you. The axiom, "If you
want a job done right, do it yourself," has enduring wisdom
for a reason.
If you're getting into real estate investment, do
your own property research. If it's vacant land you're eyeing, get
to know the neighborhood and its residents or tenants. Go to city
hall and ask about the zoning laws and construction restrictions,
and ask a planner or help-desk person what other considerations
you should watch out for.
If you're buying a building, go online to your local
appraiser's or tax collector's Web site to get an idea of the property's
estimated value and check on comparable values and sales on nearby
properties. There, you usually can determine if it's had numerous
owners in a short time (red flag!).
Knowledge of closings, repairs, buyer financing,
and rental procedures (if applicable) is also helpful, but not mandatory.
Before you go too far, you'll want to talk directly
with the seller or agent to see how willing that person is to negotiate.
The seller may not be highly motivated for any of a number of reasons.
Don't be afraid of the seller being insulted by your offer. Explain
why it may be low (property needs repairs, questionable area of
town, etc.) Real estate investing is not for the meek.
Realize you are starting a business and sketch out
your short- and long-term profit objectives for that business. Start
small, take the plunge and learn from your experience.
Good luck.
-- Posted: March 20, 2004
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