Finance/Business :: Other |
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Knowledge Is Power! |
| "An investment in knowledge pays the best interest." – Benjamin Franklin |
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Everyone is talking about due diligence, but how many investors truly know what it means to conduct thorough due diligence on a potential investment, much less carry it out?
Everybody talks about due diligence, but how many investors really know what it means to conduct thorough due diligence on a potential investment, much less carry it out?
Due diligence is the process of scrutinizing every aspect of a transaction.
In the case of a real estate transaction, it involves a process of knowing every aspect of the property that you are planning to purchase. It also involves conducting due diligence on yourself - knowing every aspect of your personal investment goals!
Although every investor will have different requirements on his/her checklist, the bottom line remains the same … Knowledge is Power! The more you can find out about what you are purchasing, and the clearer you can see how the investment will bring you closer to your own financial freedom, the more successful your venture will be.
When you’re analyzing your next property investment, ask yourself the following questions. If you don’t know the answers, start asking!
Does the property meet your desired cash flow objectives?
Do you have an exit strategy in place? Re-sell, re-finance, buy and hold?
How long do you want to keep this property (keeping in mind your exit strategy)?
Does the location show signs of economic growth? (Are there any new developments, projects, etc. that will contribute to future appreciation?)
Is the price within market value? (Have you looked into the price of similar properties recently sold within the same area?)
What are the conditions of the purchase and/or lease agreement?
Have you verified the age of the property, thus determining any potential improvement or repairs necessary now or in the near future (roof / electrical / plumbing / cosmetic)?
Have you taken a look at all the taxes involved? How about utility costs and zoning restrictions?
Have you looked into the title status / insurance?
Is the current rental income over / under market value?
Are all of the legal agreements in order (signed by real tenant(s), not containing hidden clauses, etc)?
Is the rental agreement transferable to a new owner?
What are the rental income deposit arrangements?
This is just a starting list … I expect you should double it, based on your own criteria.
Remember, the name of the game is: Don’t be afraid to ask questions until you obtain clear answers! Read all documents thoroughly, and last but not least, (hear the alarms on this one!) do not give any deposit away to the developer if it does not go to a trust account of a third party lawyer or notary!
If everything meets your requirements, the property should produce a great stream of passive income, and your new acquisition will be one that you will enjoy for many years to come. In the end, real estate investment can reward like no other investment can. But you must make your decisions based on specific due diligence facts – not emotions.
Make your investment an asset, not a liability make it work for you by gaining more knowledge and, therefore, power over your financial destiny!
Make your investment a plus, not a minus; make it work for you by gaining more knowledge and, therefore, power over your own financial destiny!
Marie-France Dayan Montréal, Québec, Canada A French native, born in Corsica, Marie-France left France at the age of 20 for an education in the United States. After obtaining her MBA from San Francisco State University, she began developing an international career as Director of Business Development for the Danzas International Group. After 8 years, Marie-France took a sabbatical from the corporate world to pursue her passion of “Feng Shui”, which she taught until 2005 and still practices today. Marie-France returned to the business world in 2005 with an invigorating strength and balance to a company focused on the acquisition of investment properties worldwide. Later on she created a commercial financing division to meet the needs of developers seeking private financing. She also added a marketing branch to help developers better market their properties. From this joining of expertise and balance, PI Global Marketing was born to complete the circle, assisting real estate developers and property owners understand how to best attract, capture, and convert the property investor market to meet their sales goals.
Article Source: www.activehowto.com
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Posted 2010-08-18 00:39:52 By Marie-france Dayan
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