Real Estate Tips

Hello! David J here again bringing you more of the steps on my journey toward financial independence.

This post, I want to pass along some tips I've come across. Again, more stuff you'd pay thousands for from anyone else.

Investor's Research

Now, quite the opposite of real estate, my sister lives with her husband on a sailboat. Still, she was able to pass along this link:

Mapping America — Census Bureau's 2005-9 American Community Survey
http://projects.nytimes.com/census/2010/explorer

This is a fairly high-tech map with lots of "mouse over" functions. So, you may need a speedy, newer computer to use it and get the most out of it. That said, it includes lots of data gleaned from the census - demographics, yes, but also community information. Also, it only covers up through 2009. So, it's a bit dated.

Now - you'll notice its from the New York Times, and NYTimes has said that it plans to start charging for using its website. So, don't be surprised if this is no longer a free service at some future point. Goodies like this seldom stay free for very long.

In keeping with this blog's focus, however, let me also point out: my sister and her husband bought the boat as their first retirement home. Since then, they've both seen former employers - and the associated pension plans - go under. So, the income they thought they would have has dwindled a good bit. The husband recently had a near-drowning experience which could have been much worse and could have caused medical expenses which would have devasted their finances.

All the more reason to pursue passive income from multi-family property.

Property Owner?

In talking to my brother, I was reminded of a common mistake rental property owners make. The first home he and his wife bought is now an income property for them ... or, at least, it should be. He remarked that he still has two houses and wishes he only had one. I asked him if it was positive cash flow. He said just barely. When I asked why, he said it had to do with incidental expenses which crop up: this breaks down, that needs replacement, water in the basement, and so on. When I asked what his maintenance budget was, he just sort of stumbled over his response.

See, any rental property has to be treated differently than your own home. The property has to pay its own expenses - ALL of them! It's up to you, the owner - or your assigned property manager - to include some cash reserve deposits in your "positive" cash flow.

With your own home, when a sump pump breaks, a toilet flush valve breaks, or something else happens, you can usually absorb that into your household budget.

Your income property has to have its own budget, separate from your household and your personal income. Your income property has to carry its own weight, entirely separate from your personal income.

Income property -MUST- be treated as a business. It has to stand on its own, first and foremost. If it can't, consider selling it to someone who can afford to rehab it so it can command a higher rent and cover all of its own expenses with a little left over for the owner. You could rehab it, or pay someone to do it, unless you're competent and available to do it yourself. Just remember that any work you do or have done has to be to code and must pass inspection.

In my case, I'm looking to acquire large multi-family properties. So, I'll be hiring a property manager, hiring tradesmen and rehabbers, and so on. I'm only one man with physical challenges. I need to hire a team to do what I myself cannot.

Remember also to control everything - own nothing. Your rental properties should be assets of a business or businesses you control so you personally cannot be sued to gain control of those properties. We've talked about this before. See my earlier posts on this blog. Remember also that I cannot give financial or legal advice. Consult your legal and financial professionals for guidance.

We'll talk again soon!

Take care - be well!

Much Success!