Ten tips for a better real estate investing experience

When it comes to investing, everyone has personal goals.
There are certain universal things a real-estate investor must know. Ron Barringer - a Placer County broker for more than 30 years - said: "The most important thing in investing is, what the return on your investment is."
Below are 10 tips for the world of real estate investing.
1. Compare property values and rents:
Financial statistics only go so far. The best measure of a property's market value is often the sale prices of nearby properties. The same holds true for rents. A low price can often be justified by a reasonable rent; renters who can afford a high rent can afford to buy instead.
2. Specialize in something you know:
Start in a market segment you know. Whether you focus on fixer-uppers, foreclosures, starter homes, low-down-payment properties, condominiums, or small apartment buildings, you'll benefit from experience by specializing in one aspect of investment real-estate properties.
3. Know the costs going in:
Know the financial statements inside and out. What are the operating expenses? What are the loan payments? Vacancy costs? What does the cash flow statement look like? These are key issues that must be addressed before making a solid investment.
4. Know where your tenants are coming from:
If the last rent increase was recent, your tenants may be considering a move. If tenants have a short-term lease, they may be living there simply to attract unsuspecting buyers. It is also important to collect the tenants' security deposits at closing.
5. Assess the tax situation:
Taxes are an integral part of successful real-estate investing, and they often make the difference between a positive cash flow and a negative one. Know the tax situation, and see how it can be manipulated to your advantage. It may be a good idea to consult a tax advisor.
6. Be careful - tax laws may change:
Don't base your investment on current tax laws. A good investment is a good investment regardless of the tax code. The right property with the right financing is what you should look for as an investor.
7. Investigate insurance coverage:
If a seller's coverage is based on lower-than-current replacement value, your insurance cost may increase when you pay a higher purchase price.
8. Confirm utility costs:
Ask the local utilities to verify recent utility expenses, especially if any of these costs are included in your tenant's rent.
9. Consult your accountant:
Be sure to find an accountant who is well-versed with the constantly evolving tax code.
10. Inspect:
Make sure you always perform a thorough inspection of the property before buying it. Never, ever, buy any property without at least examining the site. In some cases, hiring professional inspectors to examine the structural and mechanical system may be a sound investment.
Gene Thorpe is the secretary/treasurer of the Placer County Association of Realtors, and the broker/manager of Pavilion Realty, Inc. You may reach him at Gene@movingtoplacercounty.com.