I have seen good investments go bad, and I have seen terrible investments somehow go great.
What was the underlying factor? Luck? Government policy, nope.
The investor.
If you wish to do condominium investing properly you must treat yourself like an investor,not a speculator.
This article will outline some ways to do so.
Corporations Use corporations to hold your Real Estate.
Starting out it is always tempting to want to cut costs and have things in our names, however that is a dangerous thing to do.
The legal costs of setting up a corporations is nothing in compared to the amount of damages you can be sued for if something were to go wrong in your business.
A corporation gives your Investment a new identity in the face of the law and as such it has its own tax requirements which do not interfere with your normal tax records.
Corporations also allow you some form of deductions when it comes time to pay your dues to the government.
A corporation is the first thing you need to have as a professional investor in multi unit residential Real Estate.
Management Some people's objection to investing in Real Estate is 'I don't want to be fixing toilets and collecting rents from difficult tenants'.
This is entirely true if you want it to be true,and your failure to adequately get professional help will often make it true! Unless you are a qualified Real Estate professional I suggest you hire a professional management company to take care of the rougher edges of your business.
A management company will usually charge you some leasing fees as well as a certain percentage of total rent collected.
They traditionally handle things such as rent collection,advertising,tenant screening,lease agreements, repairs and so on.
As you can see, they do a lot for you and allow you the opportunity to get to leverage your time in looking out for more deals elsewhere, time that you would have otherwise spent running around trying to do all of the activities yourself.
The flip side of not using a management company(assuming you are not a qualified manager)is countless hours spent on your new 24/hour seven day a week job.
You will spend vast amounts of time filling out paper work, screening tenants(never the most pleasant thing to do),running after tenants to collect rent(emotionally taxing especially when faced with compelling life stories),trying to get your building occupied through advertising, fixing toilets(imagine a broke toilet on the 5th floor...
nope!) Do you REALLY want to do all that?! Accountants and Lawyers Do not try to save up on legal and professional help please! In this business, things go wrong and that is just how it is.
Even if things do not go wrong, you must always have competent legal advice ready to inform you of how best to go about increasing your bottom line whilst doing things by the book.
It is nearly impossible for you(assuming you are not a lawyer accountant combination)to know the finer details of Real Estate tax code as well as Accounting procedures for buildings in each and every state/country you invest in.
Your corporation must have lawyers ready to help you with lease agreements as well as buy/sell agreements.
Failure to do so could be an expensive and drawn out law suit or even worse, having the IRS knock at your door with a smile(that is one smile you do not want to see in your life!) So follow these and you are off to a better start than before.
What was the underlying factor? Luck? Government policy, nope.
The investor.
If you wish to do condominium investing properly you must treat yourself like an investor,not a speculator.
This article will outline some ways to do so.
Corporations Use corporations to hold your Real Estate.
Starting out it is always tempting to want to cut costs and have things in our names, however that is a dangerous thing to do.
The legal costs of setting up a corporations is nothing in compared to the amount of damages you can be sued for if something were to go wrong in your business.
A corporation gives your Investment a new identity in the face of the law and as such it has its own tax requirements which do not interfere with your normal tax records.
Corporations also allow you some form of deductions when it comes time to pay your dues to the government.
A corporation is the first thing you need to have as a professional investor in multi unit residential Real Estate.
Management Some people's objection to investing in Real Estate is 'I don't want to be fixing toilets and collecting rents from difficult tenants'.
This is entirely true if you want it to be true,and your failure to adequately get professional help will often make it true! Unless you are a qualified Real Estate professional I suggest you hire a professional management company to take care of the rougher edges of your business.
A management company will usually charge you some leasing fees as well as a certain percentage of total rent collected.
They traditionally handle things such as rent collection,advertising,tenant screening,lease agreements, repairs and so on.
As you can see, they do a lot for you and allow you the opportunity to get to leverage your time in looking out for more deals elsewhere, time that you would have otherwise spent running around trying to do all of the activities yourself.
The flip side of not using a management company(assuming you are not a qualified manager)is countless hours spent on your new 24/hour seven day a week job.
You will spend vast amounts of time filling out paper work, screening tenants(never the most pleasant thing to do),running after tenants to collect rent(emotionally taxing especially when faced with compelling life stories),trying to get your building occupied through advertising, fixing toilets(imagine a broke toilet on the 5th floor...
nope!) Do you REALLY want to do all that?! Accountants and Lawyers Do not try to save up on legal and professional help please! In this business, things go wrong and that is just how it is.
Even if things do not go wrong, you must always have competent legal advice ready to inform you of how best to go about increasing your bottom line whilst doing things by the book.
It is nearly impossible for you(assuming you are not a lawyer accountant combination)to know the finer details of Real Estate tax code as well as Accounting procedures for buildings in each and every state/country you invest in.
Your corporation must have lawyers ready to help you with lease agreements as well as buy/sell agreements.
Failure to do so could be an expensive and drawn out law suit or even worse, having the IRS knock at your door with a smile(that is one smile you do not want to see in your life!) So follow these and you are off to a better start than before.
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