So you want to invest in Real Estate

So you want to be a Real Estate Investor….
Standing in the aisle of my favorite bookstore, I was overwhelmed by all of the titles that promise “Real Estate Riches Overnight”, ”Make Millions with NO Money Down”, “Even a Total Idiot Can Get Rich in Real Estate”. OK, I’m thinking we need to define rich and probably define idiot too. Can it really be that easy? Are idiots becoming millionaires overnight? What am I missing?

If you’ve lived in the Valley of the Sun for the past 12 months you have probably noticed the change in the Real Estate market. Insane, Crazy, Extreme. Wild stories of builders raising prices in new subdivisions over $50,000 during the first six months. Your neighbor down the street making a $100,000 profit on a home she has owned less then three years. You can’t help but wonder if it is ever going to end and how can you get your piece of the pie.

First, invest in you. If you do not already own your own home, start there. It makes no sense to rent an apartment while buying properties for other people to live in and lease from you. Your home is the most important purchase the average person will make in their lifetime.

Once you have taken care of your living situation, it is now time to start making decisions about the type of real estate investor you wish to be. Do you want to own single-family homes, condominiums, or even multi-unit properties? How do you feel about raw land? Commercial buildings? What about a parking structure or a business opportunity? You see, the world of real estate is filled with many choices. Most of those choices will be dictated by your current situation. How much time you have to devote to your properties and how much money you have to spend.

Answering the above questions will probably not be easy. You need to form a team of people to help you with your decisions. I strongly urge all of my clients to consult a good accountant and/or tax attorney before making any real estate purchases. Accounting has never been my strong suit and while I can execute a 1031 tax-deferred exchange, I am not qualified to give advice on the tax benefit. That is when we call in the CPA’s.

The rest of your team should consist of a mortgage broker, home inspector, insurance agent, real estate appraiser, escrow officer, and the most important piece of this puzzle a licensed Realtor. I say your Realtor is your most important piece because not only will they help you identify and locate investment properties, but they are the member of your team who helps you coordinate the other members while maintaining contact with the seller and protecting your best interests all at the same time.