Real Estate Investing 101 2015

Summary:

• Real Estate Investing 101 by Kris Krohn is a comprehensive guide to real estate investing. It covers the basics of real estate investment, from understanding the different types of investments and how they work, to finding properties that are right for you and making smart decisions when it comes to financing your investments. The book also provides detailed advice on how to manage your investments once you have them, including tips on managing tenants, dealing with taxes and insurance, and more.

  Krohn begins by discussing the various types of real estate investments available today. He explains what each type entails in terms of risk level, potential returns, liquidity requirements, tax implications and other factors. He then goes into detail about how to find good deals in both residential and commercial markets. This includes strategies such as researching local market trends; using online resources like Zillow or Trulia; networking with agents; attending auctions; driving around neighborhoods looking for “For Sale” signs; joining investor clubs or groups; reading newspapers or magazines related to real estate investing; talking with friends who may be investors themselves.

  The book also covers important topics such as financing options (including traditional mortgages versus private money lenders), legal considerations (such as contracts), tenant management (including screening tenants) , property maintenance (including budgeting for repairs) , taxes (including deductions) , insurance coverage (for liability protection) , exit strategies (such as selling a property quickly at a profit).

  Finally Krohn offers practical advice on setting goals for success in real estate investing. He emphasizes the importance of having realistic expectations regarding profits while still striving towards long-term wealth building through careful planning and disciplined execution.

Main ideas:

• #1.     Understand the Different Types of Real Estate Investing: Real estate investing can take many forms, from flipping houses to buying rental properties to investing in REITs. It is important to understand the different types of real estate investing and how they can be used to generate income.
  
  

  Flipping houses is one of the most popular forms of real estate investing. This involves buying a property, making improvements to it, and then selling it for a profit. It can be done quickly or over time depending on the investor’s goals and resources. Flipping houses requires knowledge of local markets, an understanding of construction costs, and access to financing.

  Buying rental properties is another form of real estate investing that can generate income through monthly rent payments from tenants. Investors must consider factors such as location, condition of the property, tenant demand in the area, and potential return on investment when selecting rental properties.

  Investing in REITs (real estate investment trusts) is another way to invest in real estate without actually owning any physical property. REITs are publicly traded companies that own or finance income-producing real estate assets such as office buildings, shopping centers, apartments complexes etc., allowing investors to benefit from their profits without having direct ownership.

• #2.     Research the Market: Before investing in real estate, it is important to research the local market to understand the current trends and potential opportunities. This will help investors make informed decisions and maximize their returns.
  
  

  Researching the market is an essential step for any real estate investor. It helps investors understand current trends and identify potential opportunities in their local area. By researching the market, investors can make informed decisions that will maximize their returns on investment.

  When researching the market, it’s important to look at factors such as population growth, job growth, housing supply and demand, rental rates, property values and taxes. Additionally, investors should consider economic indicators such as GDP growth rate and inflation rate to get a better understanding of how these factors may affect their investments.

  Investors should also research local zoning laws and regulations to ensure they are investing in areas where they can legally build or develop properties. Finally, it’s important to stay up-to-date with news related to real estate so you can be aware of any changes that could impact your investments.

  By taking the time to research the local market before investing in real estate, investors can make more informed decisions that will help them achieve greater success with their investments.

• #3.     Develop a Plan: Developing a plan is essential for successful real estate investing. This plan should include a budget, timeline, and goals. It should also include strategies for finding and evaluating potential investments.
  
  

  Developing a plan is essential for successful real estate investing. A well-thought out plan should include a budget, timeline, and goals that are realistic and achievable. It should also include strategies for finding and evaluating potential investments. This includes researching the local market to identify areas with good rental demand or appreciation potential, as well as understanding the different types of investment properties available in your area.

  When creating your plan, it’s important to consider all aspects of the investment process from start to finish. This includes setting up financing options such as mortgages or lines of credit; determining how much you can afford to invest; researching neighborhoods and property values; negotiating purchase prices; managing tenants; maintaining properties; and selling when ready.

  Your plan should also factor in any risks associated with real estate investing so that you can be prepared if something goes wrong. Finally, make sure you have an exit strategy in place so that you know when it’s time to sell or refinance your investments.

• #4.     Find the Right Property: Finding the right property is key to successful real estate investing. Investors should look for properties that have potential for appreciation and that meet their investment goals.
  
  

  Finding the right property is essential for successful real estate investing. Investors should take into account a variety of factors when searching for properties, such as location, potential appreciation, and their own investment goals. Location is important because it can affect the value of a property over time; investors should look for areas that are likely to experience growth in the future. Potential appreciation is also an important factor to consider; investors should research local markets and trends to determine which properties have good prospects for increasing in value over time.

  Investors must also consider their own investment goals when selecting a property. They need to decide what type of return they want from their investments and how much risk they are willing to take on. For example, some investors may prefer more stable investments with lower returns while others may be willing to accept higher risks in exchange for potentially higher returns.

  By taking all these factors into consideration, investors can find the right property that meets both their financial needs and long-term objectives.

• #5.     Analyze the Property: Before investing in a property, it is important to analyze it to determine its potential for appreciation and rental income. This analysis should include an assessment of the property’s condition, location, and market value.
  
  

  Analyzing a property before investing is essential to ensure that it will be a profitable investment. This analysis should include an assessment of the condition, location, and market value of the property. It is important to consider the current state of the property and its potential for appreciation or rental income in order to make an informed decision about whether or not it is worth investing in.

  When assessing the condition of a property, look at factors such as age, structural integrity, and any necessary repairs or renovations that may need to be done. Additionally, take into account any zoning regulations that could affect future development plans for the area. Location also plays an important role when analyzing a property; research local amenities such as schools, parks, public transportation options and other attractions which can influence desirability.

  Finally, determine what comparable properties are selling for in order to get an accurate estimate of market value. Consider both short-term trends (such as recent sales) and long-term trends (such as population growth). By taking all these factors into consideration you can make sure your real estate investments are sound decisions.

• #6.     Negotiate the Deal: Negotiating the deal is an important part of real estate investing. Investors should be prepared to negotiate the purchase price, terms, and other aspects of the deal.
  
  

  Negotiating the deal is an essential part of real estate investing. Its important for investors to be prepared to negotiate the purchase price, terms, and other aspects of the deal in order to get a good return on their investment. Negotiation involves understanding what you want out of the deal and being able to communicate that effectively with the seller or agent. This means doing your research ahead of time so you know what kind of offer will be acceptable and how much flexibility there is in terms such as financing options, closing costs, repairs needed, etc.

  When negotiating a real estate deal it’s important to remain calm and professional throughout the process. You should also have a clear idea about what you are willing to accept from each party involved in order to reach an agreement that works for everyone. Additionally, it’s important not to rush into any decisions without taking some time first to consider all possible outcomes before making any commitments.

  Finally, dont forget that negotiation isnt just about getting a good price; its also about creating win-win situations where both parties benefit from reaching an agreement. By keeping this in mind during negotiations you can ensure that everyone walks away feeling satisfied with their end result.

• #7.     Secure Financing: Securing financing is essential for real estate investing. Investors should research different financing options and determine which one is best for their situation.
  
  

  Secure financing is an essential part of real estate investing. It can be the difference between success and failure in a venture, so its important to take the time to research different financing options and determine which one is best for your situation. There are many types of financing available, including traditional bank loans, private money lenders, hard money lenders, seller-financing arrangements, home equity lines of credit (HELOCs), and more. Each type has its own advantages and disadvantages that should be considered before making a decision.

  Traditional bank loans are often the most popular option for real estate investors because they offer competitive interest rates and long repayment terms. However, banks may require extensive documentation such as tax returns or financial statements in order to qualify for a loan. Private money lenders typically provide short-term loans with higher interest rates than banks but without requiring as much paperwork or collateral. Hard money lenders usually have even higher interest rates but can provide quick access to capital when needed.

  Seller-financing arrangements involve having the seller carry back some portion of the purchase price on behalf of the buyer over an agreed upon period of time at an agreed upon rate of return. This type of arrangement can be beneficial if you dont have enough cash upfront or if youre unable to secure traditional financing from a lender due to poor credit history or lack thereof.

  Home equity lines of credit (HELOCs) allow homeowners to borrow against their existing home equity by taking out a line of credit secured by their property value up front rather than waiting until after closing on a new property purchase like other forms do. HELOCs generally come with lower interest rates than other forms but also require good credit scores in order to qualify.

  No matter what type you choose, make sure that you understand all aspects involved before committing yourself financially so that you can make informed decisions about your investments going forward.

• #8.     Manage the Property: Managing the property is an important part of real estate investing. Investors should be prepared to handle maintenance, repairs, and tenant issues.
  
  

  Managing the property is an essential part of real estate investing. It requires a great deal of time and effort to ensure that your investment is running smoothly and efficiently. As an investor, you must be prepared to handle maintenance, repairs, tenant issues, and other related tasks. You should also have a plan in place for how you will manage the property on a day-to-day basis.

  When it comes to managing the property, there are several key steps that need to be taken. First off, you should create a budget for all expenses associated with maintaining the property such as taxes, insurance premiums, utilities bills etc. This will help you stay on top of any unexpected costs or fees that may arise throughout the year.

  You should also develop policies and procedures for dealing with tenants including rent collection methods and eviction processes if necessary. Additionally, it’s important to keep up with regular maintenance tasks such as lawn care or snow removal so that your rental units remain attractive to potential renters.

  Finally, having good communication skills is essential when managing a rental property since this can help prevent misunderstandings between yourself and tenants which could lead to costly legal disputes down the line.

• #9.     Maximize Returns: Maximizing returns is the goal of real estate investing. Investors should look for ways to increase rental income and appreciation potential.
  
  

  Maximizing returns is the goal of real estate investing. Investors should look for ways to increase rental income and appreciation potential. This can be done by researching local markets, understanding current trends, and finding properties that have a good chance of increasing in value over time. Additionally, investors should consider strategies such as rehabbing or renovating existing properties to improve their condition and make them more attractive to tenants or buyers.

  Investors should also focus on creating positive cash flow from their investments. This means looking for opportunities where rental income exceeds expenses associated with owning the property such as taxes, insurance, maintenance costs, etc. By doing this investors can ensure they are making money each month while also building equity in the property.

  Finally, it’s important to diversify your portfolio so you don’t put all your eggs in one basket. Investing in different types of real estate assets such as single-family homes, multi-family dwellings, commercial buildings or land can help spread out risk and maximize returns over time.

• #10.     Exit Strategies: Developing an exit strategy is essential for successful real estate investing. Investors should consider different exit strategies and determine which one is best for their situation.
  
  

  Exit strategies are an important part of any real estate investment plan. An exit strategy is a plan for how you will get out of the investment when it’s time to do so. It can involve selling the property, refinancing, or renting it out. Each option has its own advantages and disadvantages that should be considered before making a decision.

  When developing an exit strategy, investors should consider their goals and objectives for the investment as well as their timeline for exiting the deal. They should also think about what type of return they want to achieve from the sale or rental income generated by the property. Additionally, investors need to factor in potential risks associated with each option such as market conditions and tenant turnover.

  Investors may choose one exit strategy over another depending on their individual situation and preferences. For example, if they have a short-term goal in mind then selling might be more appropriate than renting out the property since it could provide them with quicker returns on their investments. On the other hand, if they are looking for long-term cash flow then renting might be more suitable.

  It is important to remember that no matter which exit strategy you choose there will always be some risk involved so make sure you understand all aspects of your chosen approach before committing yourself financially.

• #11.     Tax Considerations: Tax considerations are an important part of real estate investing. Investors should understand the tax implications of their investments and take steps to minimize their tax liability.
  
  

  Tax considerations are an important part of real estate investing. Investors should understand the tax implications of their investments and take steps to minimize their tax liability. This includes understanding how taxes apply to income from rental properties, capital gains from selling a property, depreciation deductions for investment properties, and other related topics. It is also important to be aware of any applicable local or state taxes that may affect your investments.

  When it comes to rental properties, investors need to understand the rules around deducting expenses such as repairs and maintenance costs, insurance premiums, mortgage interest payments, property management fees and more. Additionally, investors should be aware of any potential tax credits they may qualify for when purchasing a rental property.

  Capital gains taxes can also have a significant impact on profits from real estate investments. When selling an investment property at a profit (or loss), investors must pay attention to both federal and state capital gains rates in order to maximize their return on investment while minimizing their overall tax burden.

  Finally, depreciation deductions can help reduce taxable income generated by rental properties over time. Depreciation allows investors to write off certain costs associated with owning an investment property each year until the cost basis has been fully depreciated.

• #12.     Investing in REITs: Investing in REITs is a popular form of real estate investing. REITs offer investors the potential for income and appreciation, but they also come with risks.
  
  

  REITs, or Real Estate Investment Trusts, are a type of investment vehicle that allows investors to purchase shares in a portfolio of real estate assets. REITs provide investors with the opportunity to invest in professionally managed portfolios of income-producing properties without having to buy and manage individual properties themselves. By investing in REITs, investors can benefit from diversification across different types of real estate investments such as office buildings, shopping centers, apartments and hotels.

  Investing in REITs offers several advantages over other forms of real estate investing. For one thing, they offer liquidity since they trade on major stock exchanges like any other publicly traded security. They also tend to have lower transaction costs than direct ownership because there is no need for appraisals or inspections when buying into a REIT. Additionally, many REITs pay out dividends which can provide an additional source of income for investors.

  However, it’s important to remember that all investments come with risks and this includes investing in REITs. The value of your investment may go up or down depending on market conditions so you should always do your research before making any decisions about where to invest your money.

• #13.     Investing in Foreclosures: Investing in foreclosures can be a great way to get a good deal on a property. Investors should understand the risks and rewards of investing in foreclosures before taking the plunge.
  
  

  Investing in foreclosures can be a great way to get a good deal on a property. Foreclosed properties are often sold at discounted prices, making them attractive investments for those looking to make money in real estate. However, there are some risks associated with investing in foreclosures that should be considered before taking the plunge.

  One of the biggest risks is that you may not know what condition the property is actually in until after you purchase it. Many times, banks will only provide limited information about the condition of the home and its features when they list it for sale. This means that investors must do their own due diligence to ensure they understand exactly what they’re getting into before buying.

  Another risk is that foreclosure auctions can be competitive and unpredictable. Investors need to have an understanding of how these auctions work and how much competition there might be from other buyers so they don’t end up overpaying or losing out on a great deal.

  Finally, investors should also consider any potential legal issues associated with purchasing a foreclosure such as unpaid taxes or liens against the property which could become their responsibility if purchased without being cleared first. It’s important to research all aspects of any potential investment thoroughly before committing.

  Overall, investing in foreclosures can offer great rewards but comes with certain risks as well. By doing your homework ahead of time and understanding all aspects involved, you can increase your chances of success when investing in this type of real estate opportunity.

• #14.     Investing in Short Sales: Investing in short sales can be a great way to get a good deal on a property. Investors should understand the risks and rewards of investing in short sales before taking the plunge.
  
  

  Investing in short sales can be a great way to get a good deal on a property. Short sales occur when the seller is unable to pay off their mortgage and must sell the property for less than what they owe. This creates an opportunity for investors who are willing to take on some risk in order to purchase properties at below market value.

  Before investing in short sales, it’s important that investors understand the risks involved. The process of purchasing a short sale can be lengthy and complicated, as lenders must approve any offers made by potential buyers. Additionally, there may be hidden costs associated with these types of transactions such as closing costs or repairs that need to be taken into consideration before making an offer.

  On the other hand, if done correctly, investing in short sales can provide significant rewards for savvy real estate investors. Not only do you have the potential to purchase properties at discounted prices but you also have access to exclusive deals not available through traditional methods of buying real estate.

• #15.     Investing in Vacation Rentals: Investing in vacation rentals can be a great way to generate income and appreciation. Investors should understand the risks and rewards of investing in vacation rentals before taking the plunge.
  
  

  Investing in vacation rentals can be a great way to generate income and appreciation. Vacation rental properties offer investors the opportunity to capitalize on seasonal demand for short-term accommodations, as well as long-term leases from tenants who are looking for an extended stay. With careful planning and research, investors can find lucrative opportunities in this sector of real estate.

  When investing in vacation rentals, it is important to understand the risks associated with such investments. Vacation rental properties may require more maintenance than traditional residential or commercial properties due to their frequent turnover of guests. Additionally, there is always the risk that occupancy rates will not meet expectations during certain times of year or if economic conditions change suddenly.

  On the other hand, investing in vacation rentals also offers potential rewards. Investors have the ability to set their own prices and adjust them according to market conditions. Furthermore, they can benefit from tax advantages related to depreciation deductions and other expenses associated with owning a property.

  Overall, investing in vacation rentals requires careful consideration before taking action. It is important for investors to do their homework by researching local markets and understanding all aspects of ownership before making any decisions about purchasing a property.

• #16.     Investing in Commercial Properties: Investing in commercial properties can be a great way to generate income and appreciation. Investors should understand the risks and rewards of investing in commercial properties before taking the plunge.
  
  

  Investing in commercial properties can be a great way to generate income and appreciation. Commercial real estate investments typically involve larger sums of money than residential investments, so it is important for investors to understand the risks and rewards associated with this type of investment before taking the plunge.

  Commercial properties are often leased out to tenants who pay rent on a monthly or annual basis, providing investors with an ongoing source of income. Additionally, if the property appreciates in value over time, investors may also benefit from capital gains when they eventually sell the property. However, there are some potential drawbacks that should be considered as well.

  For example, commercial leases tend to have longer terms than residential leases which means that vacancies can last longer and cause cash flow problems for landlords. Additionally, commercial properties require more maintenance than residential ones due to their size and complexity which can lead to higher operating costs for landlords. Finally, since these types of investments involve large sums of money upfront they may not be suitable for all investors.

  Overall investing in commercial properties can be a great way to generate income and appreciation but it is important for investors to understand both the risks and rewards involved before making any decisions.

• #17.     Investing in Fix-and-Flip Properties: Investing in fix-and-flip properties can be a great way to generate income and appreciation. Investors should understand the risks and rewards of investing in fix-and-flip properties before taking the plunge.
  
  

  Investing in fix-and-flip properties can be a great way to generate income and appreciation. Fix-and-flip investments involve buying an undervalued property, renovating it, and then selling it for a profit. This type of investment requires careful research and planning as there are many risks involved. Investors should understand the local real estate market, have access to capital for renovations, and be prepared to manage the project from start to finish.

  The potential rewards of investing in fix-and-flips include high returns on investment (ROI) if done correctly. The ROI is determined by how much money was invested into the property versus how much money was made when it sold. Additionally, investors may benefit from tax advantages such as depreciation deductions or capital gains exemptions depending on their individual situation.

  However, there are also risks associated with this type of investment that must be taken into consideration before taking the plunge. These include unexpected costs due to unforeseen repairs or delays; difficulty finding buyers; legal issues related to zoning regulations or tenant rights; and fluctuations in the housing market which could affect sale prices.

  Overall, investing in fix-and-flip properties can be a lucrative venture but only if done properly with thorough research and planning beforehand. It’s important for investors to understand all aspects of this type of investment before committing any funds so they can make informed decisions about whether or not this strategy is right for them.

• #18.     Investing in Multi-Family Properties: Investing in multi-family properties can be a great way to generate income and appreciation. Investors should understand the risks and rewards of investing in multi-family properties before taking the plunge.
  
  

  Investing in multi-family properties can be a great way to generate income and appreciation. Multi-family properties are typically larger than single family homes, allowing investors to purchase multiple units at once and rent them out for additional income. This type of investment also offers the potential for capital gains when the property is sold or refinanced.

  When investing in multi-family properties, it’s important to understand the risks involved. Investors should research local rental markets and consider factors such as vacancy rates, tenant turnover, maintenance costs, insurance premiums, taxes and other expenses associated with owning a rental property. Additionally, investors should have an understanding of how much they can expect to make from their investments over time.

  It’s also important for investors to understand that there may be periods where tenants don’t pay rent on time or vacancies occur between tenants. Having reserves set aside will help cover these unexpected costs so that cash flow isnt disrupted during those times.

  Overall, investing in multi-family properties can be a great way to generate income and build wealth over time if done correctly. With proper research into local markets and careful consideration of all associated risks before taking the plunge into this type of real estate investment opportunity.

• #19.     Investing in Land: Investing in land can be a great way to generate income and appreciation. Investors should understand the risks and rewards of investing in land before taking the plunge.
  
  

  Investing in land can be a great way to generate income and appreciation. It is important for investors to understand the risks associated with investing in land before taking the plunge. Land investments can provide steady cash flow through rental income, or they may appreciate over time as property values increase. Investors should also consider potential tax benefits when evaluating their investment options.

  When considering an investment in land, it is important to research local zoning laws and regulations that could affect the use of the property. Additionally, investors should assess any environmental issues that could impact their ability to develop or use the land for its intended purpose. Finally, investors should evaluate market conditions such as population growth and economic trends that could influence future demand for properties.

  Overall, investing in land can be a lucrative endeavor if done correctly. By researching local laws and regulations, assessing environmental factors, and evaluating market conditions prior to making an investment decision, investors can maximize their chances of success while minimizing risk.

• #20.     Investing in International Properties: Investing in international properties can be a great way to generate income and appreciation. Investors should understand the risks and rewards of investing in international properties before taking the plunge.
  
  

  Investing in international properties can be a great way to diversify your portfolio and potentially generate income and appreciation. Before taking the plunge, investors should understand the risks associated with investing in foreign markets. These include currency fluctuations, political instability, legal issues, taxation laws, and other factors that could affect returns.

  It is important to research the local market before making any investments. This includes understanding the economic conditions of the country or region you are considering investing in as well as researching potential rental yields or capital gains from property sales. Additionally, it is important to consider whether there are restrictions on foreign ownership of real estate in that particular area.

  When investing internationally it is also essential to have an experienced team on hand who can provide advice about local regulations and customs. It may also be beneficial to hire a lawyer who specializes in international real estate transactions so they can help ensure all paperwork is completed correctly.

  Finally, investors should remember that while international investments offer potential rewards they also come with additional risk compared to domestic investments. Therefore it’s important for investors to do their due diligence before committing funds into any overseas venture.