Purchasing Investment Property – Five Considerations to Make Before You Buy

DuPage County real estate lawyersInvesting in real estate can be a lucrative move for the financially savvy, but for those that fail to do their homework, there is a risk of severe financial loss. Learn how you can be a part of the former group of investors, rather than the latter, by avoiding some of the most common real estate investment pitfalls. You shall also discover how an experienced attorney can help reduce the risk of complications in your next real estate transaction.

How Much Will It Cost? 

Calculating the cost of a property can get a little complex, especially for the novice investor. That is because there is more to cost than the sale price, closing costs, and title fees. There could be zoning problems that need to be corrected before you can rent or sell the property, and distressed properties, which are common in the real estate investment sector, could have more damage than you initially thought. As such, investors are encouraged to perform their due diligence before purchasing an investment property, especially if it needs repairs.

How Will Location Impact Your ROI?

Location is everything, especially when it comes to investment property. Prime locations will typically cost more, but they tend to have a higher return-on-investment (ROI). In contrast, properties that are in sub-prime locations are more affordable, but they may have a lower ROI. Areas that are up-and-coming may have a lower ROI to start with, but they may provide you with long-term gains. You could also find yourself dealing with a property that is located in a distressed or declining area, and that might require you to loosen your renting requirements to obtain any sort of gain. In other words, choose your location wisely and always consider how the location could impact your ROI, both immediately and in the long-run.

Who Will Manage Your Property? 

While some investors make great property managers, others lack the skills or temperament to deal with tenants and their potential issues. For example, an investor may have a great deal of compassion, so they may be willing to rent to a tenant based on circumstance, rather than their ability to pay. Sadly, this can place the investor at a serious risk for financial loss – and possibly even financial devastation if they manage several properties in the very same manner. If you fear you cannot manage your property effectively, or you would simply like to ensure you have more time to focus on your portfolio, you may want to consider hiring a property management company instead of handling everything on your own.

Are You Following the "Rules" of Investment?

Investment gurus have one hard and fast rule: never invest in a property that cannot make at least one percent of its cost in the course of a month. In short, if a home is costing you $250,000 to purchase and prepare for tenants, you need to be able to rent it out for at least $2,500 each month. If you cannot make this, or if the pricing is unreasonable for the area, it may be best to find another property. There are exceptions, of course, but investors are discouraged from making them without the guidance and advice of a seasoned professional.

Have You Accounted for the Unexpected?

Seasoned investors know that upfront expenses, such as repairs and closing costs, are sometimes just the beginning. There may be other unexpected expenses, such as taxes and insurance as well. Plan for them and you will be more likely to experience a hefty return on your investment, but fail to do so and you could lose a substantial amount on your next transaction.

Contact Our Skilled Wheaton Real Estate Attorneys 

When you need protection in an investment transaction, Stock, Carlson, Oldfield & McGrath, LLC is the firm to call. Dedicated and experienced, our Wheaton real estate attorneys can assist you in performing your due diligence, and we can help ensure you have not missed any pertinent details. Schedule your personalized consultation to get started. Call 630-665-2500 today.

Source:

https://www.forbes.com/sites/forbesrealestatecouncil/2017/09/11/seven-things-to-consider-when-buying-an-investment-rental-property/#6f46d3b46dad

Can You Bulk Up Your Portfolio by Investing in Low Income Neighborhoods?

DuPage County real estate lawyerWhile most investors focus on up-and-coming neighborhoods, others choose to provide housing and opportunities to tenants in low-income areas. Can you really turn a profit in these areas, though, and is the risk really worth the payoff? The short answer is yes – but there are a few caveats. The following information explains how you can mitigate against the risks of investing in low-income neighborhoods. It also provides some details on how to effectively protect your investments and your financial future.

Understanding the Neighborhood is Critical

Low-income neighborhoods come in many different ranges, going from completely blighted to upper low-income. All offer investment opportunities, but the challenges you are likely to face can be greatly impacted by the income level of the community. As an example, upper low-income areas typically offer relatively safe living environments for your tenants. Blighted areas may have serious issues. Some may even have environmental issues that could impact the health and/or safety of your tenants. Knowing how to handle this will be critical to your long-term success.

Avoid Troubled Properties

Some of the biggest issues pertaining to safety and health of tenants can be completely avoided with diligence and research. Avoid housing in areas near fire-damaged properties, and steer clear of those wth a long history of short-lived occupants. Many tend to become hot spots for illegal activity and can often pose a danger to tenants. Instead, focus on areas near schools, highways, and shopping centers. These areas, though still low-income, tend to attract families and people who want to better their lives.

Working with Your Tenants

Those who lease housing in low-income neighborhoods understand a couple of very important truths: the tenants cannot afford to pay much for their rent, and the risk of bad tenants is generally higher in such areas. This does not mean that all tenants in low-income areas are horrible. In fact, there are many who simply need a chance to start over. Others may suffer from a disability that hinders their ability to make a living wage.

You can find these tenants – the ones that are more likely to take care of your property and work as hard to meet their rent in a timely manner – with a few tips. First, make sure your expectations are realistic and then define and communicate them to your tenants in a clear and concise manner. Let them know, right from the start, how much you are willing to work with them (if at all) and always have a legal contract in place to protect your interests.

Second, run a background check on all prospective tenants. This can give you a glimpse into certain problematic issues, such as frequent moves (which may indicate a problem with paying rent) or a criminal record. Just keep in mind that some may be leaving behind a life you do not fully understand. Your judgment and instincts may be necessary when determining if a tenant deserves a chance.

Contact Our DuPage County Real Estate Lawyers

If you are planning on investing in real estate property in a low-income community, it is critical that you discuss your situation with an experienced real estate lawyer. At Stock, Carlson, Oldfiled & McGrath, LLC, we work hard to protect your future and investments. We can also assist with due diligence and drafting of any legal paperwork. Learn more by scheduling a consultation with our DuPage County real estate lawyers. Call 630-665-2500 today.

Source:

http://homeguides.sfgate.com/real-estate-investing-lowincome-neighborhoods-60825.html

Should You Partner with Your Children to Invest in Real Estate?

DuPage County real estate lawyersFamily businesses can be a way for parents and children to bond, while also offering children a chance at a future they might not have otherwise had. Real estate investment is a different breed of family business, though. There are pitfalls that can leave you holding the debt and all that comes with it. This risk increases even further if you happen to have an adult child who is not quite ready to take on the responsibility. Does this mean you should not invest with your children? Not necessarily. The following can help you determine which decision may be best for your situation.

Taking an Honest Look at Your Child's Maturity Level

During the recession, a lot of real estate investors went under. Others flourished. What made the difference? It was often the ability to make sound, strong, and wise investment decisions. So, when wondering if you should partner with your children to invest in real estate, the first question you should ask is whether it is a sound and smart decision. You know your children best, so only you can truly answer this, but some things to look out for might include:

  • An unwillingness to help themselves (not working extra hours or finishing college courses, even though you are paying for them, etc.);
  • A refusal to take responsibility for basic daily living tasks (cleaning, cooking, laundry, etc.);
  • Poor use of time or other resources;
  • Any form of criminal activity;
  • Rebellious behavior or a general lack of respect for authority;
  • Addiction or gambling problems; and
  • A general lack of self-motivation.

Real Estate Investment with Adult Children Can be Rewarding

When children are responsible, ready to take on the extra task, and are willing to put for the extra effort to make it work, investing in real estate with your children can be a positive experience. It can provide them with a general sense of responsibility, can help alleviate some of the pressure off you (especially when it comes to completing physically arduous tasks), and can leave your child with a wonderful business long after you are gone. In some cases, it may even set your child up for the kind of employment independence and freedom that many people desperately crave.

How to Get Started

It is important to keep in mind that no parent should enter real estate investing with their child blindly. This is especially true for those that do not have a lot of hands-on investing experience. Instead, contact Stock, Carlson, Oldfield & McGrath, LLC for guidance and assistance. Our dedicated and experienced DuPage County real estate attorneys can provide you with sound counsel. In every situation, we will protect your interests. To learn more about how we can help, call 630-665-2500 and schedule your consultation with us today.

Source:

http://time.com/money/page/parents-adult-children-financial-support/