PURCHASING CONSIDERATIONS

Source:Essential Facts: Real Estate Management

Joseph DeCarlo-Warren-Gorham-& Lamont

LOCATION: The property should be located in a growing area or an area of future growth (known as “the path of progress”). Neighborhoods normally go through a –5- stage life cycle, progressing through growth, maturity, decline and rehabilitation stages. Property values typically fall during the decline stage. Property owners should make a careful study of the property’s location with these cycles in mind.

FINANCIAL TERMS: The finance terms of a sale contribute significantly to the desirability of the property. Favorable interest rates, low down payments, long maturity rates, and fix-up allowances are all ways to make purchases more feasible. Agreements with Sellers, including carry-back of second mortgages or trust deeds, can also make investment properties more attractive to prospective Buyers.

TIMING: The timing of a purchase is a central consideration. Real estate is a regional investment: property values depend heavily on the current state of the local market.

GUIDANCE: It is best to purchase property in an existing “up market”. Some investors try to predict the bottom of a poor market and make purchases @ that time; but often these predictions are incorrect and property values continue to decline.

Real estate management is the operation of property for the purpose of maximizing income, increasing value, and protecting the asset. When property owners seek to purchase rental properties, they must have goal in mind: evaluating the real estate investment, inspecting the property, analyzing the financial state of the property, obtaining financing, and negotiating for purchase.