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Thumping the path to income-producing property Print E-mail
Thursday, 14 September 2006
CHICAGO--  Real estate investment does not immediately give a quick result, which was the usual promise of many who has been in this business for so long.  But for investors willing to do some hard work, making a good purchase and proper management can make substantial rewards. 

One of the approaches is to get an income-producing property like a single-family home, apartment building, an office or retail building or farmland. These forms should have the intent to rent the property or units within it.  Investors benefit from rental cash flow.  Also, there is an inflation protection as operating cost increase.  Rents can increase as well. 
Real property investment is not as liquid as putting money into the stock market.  Also, they are often cyclical in nature. 

"Everyone brings a certain amount of sweat equity," said Kyle Cascioli, an adjunct professor of real estate at the University of Denver's Burns School of Real Estate and Construction Management.

The value is on the management side. Those thinking about becoming landlords should do some soul searching before deciding whether they can handle the job, said Thomas Lucier, a Florida-based real estate investor and author of "The No-Nonsense Real Estate Investor's Kit." Nine out of 10 people aren't suited for the business of managing tenants or the constant upkeep that the property will require, he said.

Deciding whether the property is affordable involves a little more homework.
Budget every cost that will be tacked on to the price, including closing costs and insurance. If the property is a fixer-upper, inspections should prove its structure is still sound; make sure to add improvement estimates into the equation, including a cushion for unforeseen extras.

Just as important as having a plan to enter the market: having an exit strategy. Investors should estimate how long they expect to hold the asset, said Joseph Fisher, president of Indianapolis-based Real Estate Investment Services Corp., which specializes in developing, leasing and managing investment real estate.

Many investors partner with others to afford a purchase, but you'd better be comfortable with the arrangement, Fisher said. Sometimes a partnership teams up a novice with a real estate professional who has knowledge of the business. Especially for the newcomer in this scenario, review a real estate investor's past performance before agreeing to work together. 

Edwina Baniqued

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