Before you can determine your property type, it’s necessary to assess your current financial state and understand what you are trying to achieve and what is possible.

Your Five Year Plan - Goal Setting

This is a technique we use over and over. Sit down right now and write down:

1. Where you want to be financially in five years (be specific, for example do you want to be earning $100,000/year in your job, own two properties that are giving you $500/month in positive income, and have $20,000 in RRSPs)?

2. What can you do in the next 12 months to achieve each of the above items (once again, be specific and try and make the items measurable)?

3. What can you do in the next six months to move towards your 12 month goals?

4. What must you achieve this month to move towards your 6 and 12 month goals?

5. Review these goals regularly. We used to do it monthly, but now we just do it quarterly. Find what works for you, and stick with it.

Think about the impact these goals will have on your real estate investing. How do you know what type of property to look for if you haven’t established the goals you wish to achieve from real estate investing? Some initial considerations before you begin a property search:

* Will you live in one of the rental units or will you be an absentee landlord?

* Do you have any savings to use for the purchase (or can you use your RRSP’s as part of the first time Home Buyer’s Plan)?

* What size of mortgage can you qualify for?

* What is your risk tolerance?

* How much spare time do you have to devote to the property?

* Do you have any construction/renovation knowledge (or know somebody that does)?

* Will you manage the property yourself, or will you hire a property manager?

* Can you afford to supplement the property monthly if necessary?

Think carefully about your answers, as each one has an impact on your choice of property. For now, let’s focus on the very first decision: Living in the building with your rental unit or being an absentee landlord.

Living in the building

Perhaps you just want to get your foot in the door in a nice neighbourhood and this is the best way to afford it, or the property you want to purchase needs some work and you want to live in it while you renovate it. Whatever the reason you want to live in your rental property, be prepared to take the good with the bad. The benefits that come to mind are (especially over a scenario where you are currently a renter):

* Cashflow from your home (tenant pays for some or all of your mortgage)

* Affording a better location with the rental income than you could otherwise qualify for and carry

* Appreciation on your home, and

* Tax benefits of repairs you do (be sure to speak to your accountant as not everything is eligible).

There are downsides to living in your rental property though:

* Potential for late night disturbances

* Feeling unsafe in your own home (but there are things you can do to carefully screen your tenants - we’ll discuss in a later edition)

* Stress of having to deal with immediate problems (both large and small) because you are located there, and

* It’s easier to “justify” spending more than you can afford on renovations because it is “your home” and you want to make it nice.

Absentee Landlord

If the down sides sound a little too much to handle then being an absentee landlord might be the answer. You may still benefit from:

* Cashflow

* Leverage other people’s money (tenant pays down the property’s mortgage)

* Tax benefits (although you will have to pay income tax on the rental income - again speak with your accountant)

* Appreciation, and

* If you choose to hire a (good) property manager, you barely have to think about your property.

Of course, if things go wrong you may not know about it because you aren’t there. Problems that could have resolved themselves easily early on can multiply and create very dramatic issues. As well, if you choose to hire a property manager there are a whole host of other issues that can arise if your property manager turns out to be a dud (in a few months we will tell you about the property manager that stole from us, and tell you how you can take steps to protect yourself from the same thing).

Bottom line is there are positives and negatives to both situations. We lived in one of our properties (a tri-plex) for almost two years. We had two police visits, loads of stress over a tenant we tried to evict, and we spent more money on renovations than we would have if we were not living there. However, all of that was worth it because we lived in an area we couldn’t afford to live in without the rental income, we were able to slowly renovate the house and it’s now increased in value substantially, and we were able to write off many of the expenses of our home against the income we get from the two other units.

So, will you live in your rental property or will you buy a place that isn’t going to be your home? How does that fit with your real estate investing goals? Now that you have some things to think about, it’s time to start figuring out what types of property investments will meet your goals.

There is no method for overnight success in real estate. Most people fantasize about landing a million dollar deal and retiring all in one shot, but in reality, real estate investing is a steady progressive process. Progressing at a reasonable pace will eventually get you to your goal. Overnight success is not a realistic goal, but rest assured you will probably make a decent amount of money.

A professional investor can average between sixty and one hundred thousand per year with good real estate investments. These earnings will occur with a steady forward progress while assuming that not everything will go as planned. You must remain practical with your real estate goals.

You cannot do everything alone. There are key people who play primary roles for you to succeed at real estate investing. The wise investor will be assisted by a team of specialists. You will need a trustworthy real estate agent who will help you analyze the properties. In order to make sure the house is worth the investment you will need an appraiser and a contractor or an inspector. You certainly must have an attorney to make sure there will be no hidden surprises popping up during the deal.

There is no approach that encompasses all situations you will encounter in the business. You must prepare a few different plans. Sometimes people have to resell a home immediately after buying it. The housing market can be unpredictable and change fast. If the window for you to make a profit passes because you can’t get your investment ready for the market, you still have the option of renting. Even this market can become ineffective or stall. If you are in this circumstance and you have no choice but to get rid of the property, you could offer a lease option or perhaps a land contract. If all else fails you may have to sell to another investor to cut your losses. When the time comes to bail, a wise investor doesn’t hesitate.

A rookie investor doesn’t have to make these common mistakes. He can avoid them by doing a little research and planning. Don’t figure out what real estate to invest in until you understand the business. Purchase one of the many available books and research some of the plans used by the pros. Find out where the free seminars are and learn the proper way to invest. In order to avoid these common faults, you must be sure to make wise decisions in your real estate investing.

This tends to become a little complicated. However, when using the suitable tools, your time and effort can definitely pay off. One of these tools is a regional planning board, which can be found in every location. One can find a list of every project planned for a location for the next five or ten years at this company. It would be foolish not to check this regularly.

When you review these proposals, hopefully you detect a relatively unknown plan to develop a neglected area. Anyone familiar with real estate knows that every time a development project takes place, the property values build up. An adept investor won’t hesitate to look for available properties in the area. You shouldn’t be distressed if the only available land is vacant. You can always buy and rezone the land for the coming development. In doing so you will succeed in upgrading your investment.

A different method for upgrading your real estate investment would be to buy a property at market value and renovate it. You may have to buy a two bedroom home right in the middle of a neighborhood with three and four bedroom homes. Through renovations you may build up the value of the home to match the market value of the larger homes surrounding it. When homeowners want a larger home but cannot afford to sell, they often take this route.

When upgrading your investments, you create equity in the property. You will find this to be a very beneficial aspect of this system. You will ultimately be able to sell the property for more than what you paid for it. However, this system does have its drawbacks.

An investor who is tentative knows when to stop upgrading his investment. It is imperative that you do not upgrade your real estate investment beyond what the market can support. Don’t forget, the intention of this is to make money. It is not always in your best interest to put thousands of dollars of renovations into a property. Most of the time, If you invest more money into a property, you will create less profit.

This strategy must be used with caution. Development plans can change or completely fail. Before you ever conclude the renovations on your property, the market may change. Just in case things go wrong, it is important to adapt a plan of action before you try this investment strategy.

It is imperative that you re-examine the properties one more time in order to ultimate whether or not this investment strategy is reasonable. Many investors have found success in doing this. You simply must proceed with caution when upgrading your investment.

One cannot stress enough how critical it is to greet the potential buyer warmly by offering food and beverages. They will feel much more comfortable purchasing a house that they already feel at home in. Give them another chance to look over each section of the house. It’s in your best interest not to crowd them at this time. You are obligated to make them feel as though they will soon be the owners of this house. If they continue to ask questions after looking at your house, you know they are still interested. If they haven’t been asking questions, they most likely will not buy the house. Listen carefully to their questions and answer each one honestly. This will be your chance to be in good position for he negotiations that will happen shortly. It is critical that you stay calm and friendly at all times.

Hopefully, you will be lucky, and the buyer will come up front and tell you they are interested in purchasing the house and more than willing to move on to the next step. Don’t get caught off guard or act surprised when this happens. You absolutely must have the buyer put his offer in writing. You always have the option of making arrangements for a contract attorney to negotiate the contract. If you proceed in this fashion, the attorney will provide you with the contract forms you will need. It’s critical to give one of these contract forms to the buyer. If the buyer only seems to be interested in discussing details about the sale, stay on the same page as them. Don’t let yourself get angry or lose control while discussing the purchase of the house. Keep in mind, you won’t be obligated to anything you talk about until it is put in writing.

You should probably avoid negotiating price verbally. Usually, a buyer will ask for your bottom dollar price. You can respond by saying that before you can contemplate negotiating price, you will need to see his entire offer in writing and proof they are able to qualify for the loan.

Ultimately, you must remain calm and friendly. Don’t take any negative remarks personally regarding the price or your house. Generally, a “for sale by owner” deal will be a beneficial situation for both parties, so don’t allow negotiations to become overly heated or personal.

Lightly colored walls that are well lit make your rooms appear larger. In the event that you do have any darkly painted walls, you should probably think about painting with white or off-white paint and increasing the number of watts of the light bulbs in your home.

If you have unsavory or overly stained carpets, you probably should replace them. You always have the option of shampooing a carpet if it doesn’t require a replacement. It is also very vital to clean and polish all windows and mirrors.

Thoroughly clean your oven and stove. Clean the drip pans under each burner. Be sure to remove all grease and dirt build-up. Polish the outside of the stove and oven to a lustrous shine. Don’t forget to clean your refrigerator or any other appliances including the dishwasher.

Clean and repair each window fixture, including the blinds. Wipe away any fingerprints around the doorknobs and light switches. It is extremely vital to clean the wall around your wastebaskets, particularly the one in the kitchen.

Disinfect all your kitchen countertops and remove any excess items from them. It is vital that you not only reduce the number of items in your cabinets in the kitchen, but in all the cabinets in your house.

If your closets appear stuffed, rearrange the clothes in them until they appear organized and not over crowded. It is vital that everything appears spacious and clear, therefore you should remove some of the items off the shelves and on the floor. Other problem areas tend to include your garage, basement, and attic space.

Be sure to check for odors. You may have become accustom to some smells, in which case you can get a neighbor to help you. You want your for sale by owner home to look, smell, and feel as fresh, clean, and as new as possible.

If, for any reason, the for sale by owner home has any leaks, rattles, or squeaks, this warns the buyer that a lot of repairs will be needed. You must do everything you can to eliminate them. This will include tightening your stairs, steps, and banister. If you find any water leaks or signs of water damage you must eliminate them. Two ways of doing this are painting over the water stains or replacing any damaged wallpaper. If you think it might be beneficial, you should clean and replace all of the caulking in your home. Search every door and window to make sure they open and close smoothly. Search every light switch, doorknob, and cabinet hinge to find any loose nuts, screws, or bolts. If you discover any loose molding, tack it down. Taking small steps and dealing with each of these little problems will largly increase your chances of selling your house at the price you choose.

So? Why do you want to know this? You are not a builder, are you? But are you a home owner who may want to sell this year?

If you have to put your home on the market and it is a big home, consider these figures with regard to the sale of your home. One of the reasons that there is a glut of new homes on the realty market this year is because builders have been pandering to the public whim.

Home owners wanted bigger and bigger homes, so builders built them. Since the 1950s, when the average home was 1,000 square feet, the square footage in an average home has more than doubled.

Suddenly the builders were caught out as this year the number of singles buying a home exceeded the number who were married with families. Unpredictably, buyers were looking for smaller and more compact homes.

Perhaps your home would sell better if you halved it? By this I mean, you will still sell it as one home, but perhaps the lower floors or one section of it, could be made into a separate suite. This way, it would interest the lone home buyer as their part of the home would be self contained, yet they would also get an income from their property.

There are many tasteful ways of dividing your home so that it still looks like a single family dwelling. Two of the biggest give away’s when there is rental suite involved are parking (too many vehicles outside one house) and two front doors.

The front door problem can be fairly easily solved by tucking one in at the side of the home. A small porch and a large bushy pot plant on the side of it will almost exclude it from the street.

As for the parking, this is easily solved if you have a large wide driveway. Build the suite it’s own patio in the back garden and section it off using trellis screening. The renter’s car will be parked behind part of this trellis. In order for this to happen, enough driveway or ornamental cobbled tile pathway must be laid for the car to have access and to maneuver.

So the house exterior will have been transformed for a renter to live in it without it looking too different. Inside the house you will need to spend a little more money if you do not have a spare bathroom and therefore you are forced to ‘convert’ part of your home to a suite from scratch.

Three items will be imperative for you to install, before you can develop this optional suite idea. First: a lockable door, door frame and possibly a small wall section must be built which will divide your premises from the rental premises.

Second: a bathroom which houses a shower, if not a bath tub, as well as toilet and wash basin.

Third: A kitchen, however small, but it must include a sink and work top, fridge, microwave/convector oven and a hob. For a studio apartment, you can consider not adding the hob, many people nowadays only use a microwave.

Preparing a mobile home for sale is less difficult than a regular home, since these homes are much smaller and easier to maintain. Your main concern when getting ready to sell should be presenting the home as is, so buyers can easily see its condition. Buyers don’t invest in mobile homes for the upgrade potential - in general, they want to be able to use the home as quickly as possible, without having to worry about structural problems.

It’s important to keep in mind that people buy mobile homes not just because they are cheaper, but because monthly mortgage payments on them also tend to be lower. If you’re in a position to help the buyer with financing (if you have full equity in the home, for example) you may be able to attract a higher price by offering a creative financing solution, such as lower monthly payments, or by offering a “seller second” on a percentage of the mortgage, if a buyer can’t qualify for the full amount. In these cases, it’s often worth it to work with a real estate professional who can draw up a custom contract - you may lose a little extra on commission, but you’ll also be making more on the final sale.

Another market to consider for your mobile home is the corporate sector. Many companies buy and re-furbish mobile homes for a wide variety of uses like temporary office space, or in planned developments. You may sell for a little bit less this way, but it may be worth it for the time and effort you save on marketing to individual buyers.

1. Plan how much money you are going to need for the project.

First, you need to set a budget and then stick with it if at all possible. You do not want too many surprising costs, so this is very important. You may want to include some kind of cost guarantees in your contract.

2. Find the property where you are going to build your dream house.

This will give you a piece of real estate to put your dream house on. A lender will also require it before you get any money for a construction loan. Find out if you can get a guarantee from the lender to have your construction loan converted to a mortgage later. This could save you a lot of money in closing costs later on.

3. Get a set of house plans drawn.

Sit down and sketch an idea of what the house plan is going to look like. Also write down some features you want to go into your dream house. Here is where you have a choice. You can either contact an architectural drafter, a home designer, or, you can even learn to draw your own house plans, which is by far the least expensive way to go.

4. Put your floor plans out for bids.

Once your house plans are completed, place an ad in a local newspaper or call different builders in your area to get a copy of your blueprints so that they can place bids on your new home. You will want to get at least three bids before you choose one, and be sure to check on the reputation of the builder, too, before you sign any agreements.

5. Get everything put in a contract.

If you make changes during construction which is common - make sure there is one set of plans that is to be used as the master plan and that both you and the builder should note and initial each and every one of those changes. That way, at the end of the job, there should not be any surprises or hidden costs.

These 5 steps will definitely help you to get started in the right direction on getting your new dream home built. Take your time and do it right, and your custom dream home will give you joy for many years to come.

Investing in Real Estate Investment Trust is very easy too. You can just buy Real Estate Investment Trust shares which trade on all major exchanges. There are certain laws governing the Real Estate Investment Trusts that help them avoiding the tax at corporate levels e.g. it is mandated that Real Estate Investment Trust’s portfolio has 75 percent of investment in real estate. Moreover, 75% of the income of Real Estate Investment Trust must be from rents or mortgage interest. There are various types of Real Estate Investment Trusts. Some Real Estate Investment Trusts own properties themselves and hence feed on the rental income from those properties. Some others indulge in providing only mortgage loans or go for mortgage backed securities. Then there are Real Estate Investment Trusts which do both i.e. rental focused investments and mortgage based investments.

There are a number of Real Estate Investment Trusts operating in the market and a lot of these Real Estate Investment Trusts are doing good business. By investing in Real Estate Investment Trust you are basically investing in real estate without actually buying a property yourself. This is one easy way of investing in real estate (and much safer too). You must surely evaluate this option for your real estate investments.

MLS i.e. multiple listing service is often termed as one the best ways to look for real estate for sale. These are published by the real estate boards. If you can lay your hands on a MLS book as soon as it is out, you can really expect to get good deals. The key is to act fast. Open houses are another good way of getting the best out of time. You can get to see dozens of ‘real estate for sale’ properties in a very short period of time. And you never know when you might come across a property that is real gold.

Investor groups are yet another rich source of real estate for sale information. Of course, how can we forget the real estate brokers? Real estate brokers are one the most popular (and sometimes most effective) information resource for real estate for sale.

Not only do they provide information about ‘real estate for sale’ but also assist in getting the deal finalized and closed. Besides that, you can also get very good deals through public auctions, bank foreclosures, FHA and VA foreclosures and distress sales.