Real Estate Investing Basics

It’s still possible to make a good deal of money in the real estate industry, but it takes a keen understanding of how real estate works as well as skilled property management. San Francisco real estate investors need to understand that a lot of time and hard work need to be invested as well if you hoping to get something back on the money that you have invested in your properties. While there are always risks associated with buying properties, these few suggestions can increase the likelihood that you come out ahead in the long run.

Making money on real estate takes time. If you are thinking that turning around properties is a great way to make some quick cash then you are mistaken. Don’t come into this with the attitude that it is better to be lucky than good at what you do. Big real estate earnings come from long term property ownership. Often, your investment will have to include hiring property management. San Francisco investors can’t be expect to maintain multiple properties for many years while waiting for values to rise. You have to be proactive and patient.

Quality is often better than quantity. If your properties are in a nice neighborhood with good schools and a low crime rate, you are likely to keep it occupied with a higher class of tenant. This preserves your property and increases the likelihood that property values will rise.

Compare rental values to investment costs. If you paid $300,000 for a home that will rent for $1,500, then you only collect half of one percent of the purchase price per month. The closer you can get to 1%, the better your investment. A $150,000 investment that brings in $1,500 a month is ideal.

Don’t get stuck in the money pit. If your mortgage and the expenses of owning the home (repairs, maintenance, taxes, etc) are more are more than you can make in a year renting it out, then the investment is generating a negative cash flow, which is never good. Look for deals where the average rent price will exceed what the property costs you.

These are the basic real estate investment rules to be considered. Don’t forget to include amongst your expenses a service that you hire for property management. San Francisco property owners will want to invest in a management company that can maintain their properties and keep them filled with the right kind of tenant.