5 Essential Tips for Real Estate Investors

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5 Essential Tips for Novice Real Estate Investors
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Real Estate Investing 101
So, youve decided to take a step towards
improving your future, by investing your hard
earned money. One of the routes youve surely
considered is real estate investing, which can
yield returns through appreciation (long term)
and rental income (short term). If investing in
real estate was clear cut, everyone would do it.
Heres what you need to know before you commit.
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Tip 1 Invest Under an LLC
Dont acquire real estate under your private
name. To better manage the risk, and for greater
tax efficiency, its best to set up a real estate
holdings limited liability company (or similar).
Above all else, investing under an LLC ensures
that your personal assets such as your 401(k),
your personal accounts, and your private home are
safe in the event that the investment loses its
value, or if an accident occurs on the property,
leading to a lawsuit. Setting up an LLC is
quick when assisted by a licensed attorney, so
dont be delay if youre already in the process
of purchasing a property.
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Tip 2 Incur Debt Responsibly
Investing requires capital, but you absolutely
dont have to be wealthy in order to invest
successfully in real estate. Even if you have
liquid capital, its often more beneficial to
take out a mortgage thanks to the low interest,
freeing up liquid funds to invest in other
channels. If youre incurring debt to purchase
a property, do your due diligence - ensure the
market is solid and rising, confirm the
propertys condition and any outstanding liens,
and have a plan to meet loan repayments in the
event that resale or rental dont materialize for
a period of one year.
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Tip 3 Assess Risk and Costs Thoroughly
Many novice investors underestimate the costs of
investing, often only considering the cost of the
property itself. However, the expenses hardly
stop there There are closing costs,
renovation and constructions costs, taxes, and
agent costs associated with any successful real
estate investment says Managing Partner and
Chief Investment Officer of Sorin Capital Jim
Higgins. Conservatively, calculate added costs
of about 15 of the property value, to determine
actual risk.
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Tip 4 Zero in on a Market
It takes a lot of time, dedication and research
to find a niche youre comfortable investing in
from a risk, return and capital perspective. To
make a good decision, speak to local experts such
as real estate agents, brokers, fellow/rival
investors (you might find a partner!), and even
longtime homeowners - all of whom have seen the
area go through various ups and downs. Read
relevant and up to date analyses of the
neighborhood, city and state youre considering,
and create a spreadsheet with criteria to
evaluate each property. When the right
opportunity comes along, youll feel a lot more
comfortable taking a leap of faith.
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Tip 5 Dont Invest in a Rush
Youve done your research, zeroed in on a niche,
lined up the capital, and perhaps already missed
out on several opportunities because you were
too slow. All of these circumstances can lead
you to make a mistake and invest in real estate
that doesnt meet your criteria. There are
consequences to rushing through the process and
skipping vital but time-consuming steps, such as
inspections and paperwork. Any seasoned
investor will tell you its always better to
spend a little more time covering your bases
before committing - so stop agonizing over all
those perfect missed opportunities.  
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Thank You!Questions?E-mail ir_at_sorincapital.com
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