AS YOU will appreciate, being able to sleep through the night is one of the primary objectives for any Commercial real estate investor.
And that’s what a great many property investors refer to as staying below your “Threshold of Insomnia”.
There may be several things which might lead you to lose sleep. One is over-borrowing; and the others are producing a poor assessment of the market place and the property itself.
Allow me to share 6 Tips about What to DO …
- At all times maintain sufficient cash reserves, so that you can manage a few months’ loan payments — in the event you were to lose a tenant, or the tenant is just late in paying for some reason.And have a sharp eye on smaller things like all machinery and maintenance bills, which can easily mount up.
- Make sure you have an investment strategy you’re happy with, and then stick to it. In other words, set reasonable objectives and pursue them. More goals have been missed as a result of lack of planning, than through the plan itself failing.
- Buy yourself a financial calculator, or access to a good software package. And learn to use it to develop a realistic projected cash flow, on an after-tax basis.
- Always keep yourself up-to-date with various developments within the current market. Be sure you keep track of what is the news and regulations affecting property; undertake training; go to workshops; and read books on Commercial property. Practical knowledge will reduce your potential risks, and boost your profit margins.
- Identify and retain a top-notch group of Consultants (real estate, legal, financial, construction, etc). The money you pay these people will be more than returned to you, because of the deals they can assist you to come up with.
- Wherever practical make sure your mortgages to not require you to give a personal guarantee. Consistently endeavor to make them non-recourse mortgages.
And 6 Traps You might want to AVOID …
- Do not be influenced to commit a large proportion of your capital into risky opportunities. They may appear glamorous as you go in, however they are often painful on the way out.
- By no means do deals on a handshake — always put them in writing, for your own protection.
- Avoid entering into joint ventures, without taking thorough guidance from your advisors.
- Never spend funds from the sale of one property to finance yet another, UNTIL settlement on the first one takes place. Way too many “sure deals” have an weird practice of coming unstuck.
- Steer clear of loans with variable payments. You will discover way too many factors outside your control, such as a unexpected surge in interest rates. Preferably, choose a fixed- rate loan. But at worst, have a 50/50 split between a fixed-rate and variable-rate mortgage.
- Avoid properties that have substantial negative cash flows (where by your costs considerably go above the income from the property).The return on money may be higher; but you can leave yourself rather exposed — much like share traders discovered, with their margin calls. Just be happy with neutral gearing; and then maximise your depreciation benefits.
When a salesperson puts an item in their customer’s hand, they are hoping that the customer won’t want to give it back. That is the theory as to why so many agents produce real estate flyers. When a potential home buyer goes to see a home, it’s hard to put the actual home in their hand but by having them leave with a flyer, the house goes with them.
Real estate flyers should never be the same as a bake sale flyer. These are flyers that should detail useful information about the home on the market. These flyers should include pictures of the outside and the selling points of the home. They should also list pieces of information about the home such as the price, they history of the home if any as well as the home details.
The selling points of the home should be pictured on real estate flyers as well. There is not one home on the market that doesn’t have a unique selling point or feature and that should be displayed as much as possible on these flyers. When potential buyers see flyers of homes, they should see stunning pictures of the home, inside and out, as well as at least one picture of a unique feature. This could be the tie breaker between two highly favored homes.
Real estate flyers are also known to be light on details. It can be very frustrating for a potential buyer to see a beautiful home for sale but details on the house aren’t in written format. There needs to be some attention given to what the home actually contains. At the very least, these flyers should tell how many rooms are in the home, the price, the total square footage as well as the number of floors that are in the home.
It is also important that real estate flyers have information about the neighborhood as well. It is a great piece of information to put on the flyer because people want to be in a neighborhood they are comfortable in. It is also very important to people to buy into a neighborhood that will keep their value for quite some time after the purchase. This is information that should be mentioned but not heavily detailed.
Real estate flyers are the flyers that could be the first thing a person sees about their future home. It is very important that these flyers be put together in a clear and concise format because a disorganized mess will never attract a serious offer. These flyers are things they can look at after they have seen the home in person and use to make their final decision when thinking of purchasing the house.
After the selling agent has gathered all the information and pictures that will be placed on the real estate flyers, they should be made and given out promptly. The flyers are very important because not only is it putting a piece of the home in a potential buyers hand, it gives crucial information. People often look at the flyers they have and compare that information to their list of desires before making a decision to decline the home or make an offer.
Real estate flyers are not just pieces of paper. They are tools that should coax a potential buyer into looking into the home. Since the important information is already on the flyer, people that are seriously interested will call the selling agent for discussion. Those that aren’t ready to purchase or don’t like the home often move on.