To help each step in the home buying process run smoothly, consider working with a seasoned real estate professional.

(ARA) – With the revised first-time homebuyer federal income tax credit currently in effect, now is the perfect time to consider making that big purchase, your first home.

“Buying a home is one of the biggest financial commitments a person can make, but first-time homebuyers and qualified return buyers are in an ideal position to take advantage of unique opportunities in the market, such as low interest rates and the choice among an abundance of for sale homes,” says Charlie Young, president and chief executive officer for ERA Real Estate.

But before you sign on the dotted line, ERA Real Estate, one of the world’s leading residential franchise networks, offers some helpful tips to ease the transition into homeownership.

Learn about the first-time homebuyer federal income tax credit

If you are considering purchasing your first home, or have not owned for at least three years, learn the parameters of the temporary first-time homebuyer tax credit, which is one of 10 provisions of the American Recovery and Reinvestment Act signed into law on Feb. 17, 2009. According to FederalHousingTaxCredit.com — a consumer Web site created by the National Association of Home Builders — for those who qualify and purchase before Dec. 1, 2009, the bill provides a tax credit of up to $8,000, calculated at 10 percent of the purchase price. Unlike the previously available credit from 2008, the money does not have to be repaid, as long as the homebuyer does not resell the house for at least three years. “The tax credit can help make the American dream of homeownership a reality for potential buyers who previously could not afford the investment,” says Young. He adds that potential homebuyers should consult with a professional tax adviser for full details on how the tax credit may benefit them.

Calculate what you can afford

With the revised first-time homebuyer federal income tax credit currently in effect, now is the perfect time to consider making that big purchase, your first home.

Before you start searching for your new home, know what you can afford. According to the U.S. Department of Housing and Urban Development, your total monthly mortgage payment — which includes principal, interest, taxes and insurance — should be about 29 percent of your monthly gross income.

What you can afford is also based on, among other things, how large of a down payment you can make and how much money you can borrow. You can start estimating this figure by using an affordability or loan calculator found on the Internet. These calculators can help compute what may fit comfortably within your budget based on factors such as annual income, annual debts, interest rates and credit score. Though Internet calculators and statistics are good references, it is recommended that you consult a financial adviser to determine exactly how much you can afford.

Choose a neighborhood

After you determine your home buying budget, think about where you want to live. Are you going to stay in your current neighborhood, or do you want to hit the open road and start fresh? No matter what, you should thoroughly research the demographics of the area. Some additional factors to consider are how far you will be from work and shopping — and if you have children, do some careful research on schools.

Make a wish list of needs and wants

Early in the home-searching process, list your basic needs such as minimum square footage, number of bedrooms and bathrooms, location and of course, the price you can afford. Web sites of leading real estate brands should have guided property searches that allow you to choose one or more of these criteria. If there are features that you would love to have in your home, but could live without, put them on your “want” list. This includes things like a pool, big yard, extra bedroom, etc.

Work with an experienced real estate professional

Searching for and purchasing your first home is an exciting experience, but it can be overwhelming. To help each step in the home buying process run smoothly, consider working with a seasoned real estate professional. Choosing a professional who is knowledgeable in your local and national markets, has access to the newest listings, and can help you negotiate prices, will increase the chances of finding your dream home.

To locate a real estate professional in your area and to learn more about home buying and the first-time homebuyer tax credit, visit ERA.com.

Courtesy of ARAcontent

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Selling Your Home in a Buyer's Market

It’s a buyer’s real estate market, so every home seller needs to know how to price their home correctly. Price your home too high, and buyers will look at other houses. Price it too low, and you risk losing money.

To price your home correctly, you need to be savvy about your local real estate market. Understanding the market will help you set an asking price that will compete favorably against other comparable homes. It’s easy to do if you just follow these simple steps:

1. Know the Competition: Visit real estate websites and drive through your local area to search for homes for sale that are similar to yours in size, number of bedrooms and bathrooms, lot size and square footage. Educate yourself about their asking prices and, especially for condos, calculate the price per square foot. Trulia.com will do most of this work for you and allows you to print out a list of comparable homes, but you’ll also want to visit Realtor.com and ForSaleByOwner.com to get a more complete list of available homes on the market.

2. Visit Open Houses: Now that you know what’s on the market, visit as many open houses as you can in order to find out how your home compares to others. Your goal is to learn as much about those homes as possible, such as upgrades and renovations to the kitchen, bathrooms and bedrooms.

3. Learn About Recently Sold Properties: Your next step in educating yourself about the local market is learning how much homes have sold for in the recent past. Home sale information is public information and can be found a number of ways. Your county clerk’s office and/or local town hall can provide you with this data, but the Internet has made the task even easier. Trulia.com and Zillow.com each have a “Recently Sold” feature that will list all information about properties that have sold near any given address.

4. Get a Starting Point: For a simple, cost-effective way to get a ballpark range of how much your home is worth, consider getting an Automated Valuation Model (AVM). Similar to a real estate agent’s Comparative Market Analysis, an AVM will compare your home to similar nearby recently sold properties. The AVM won’t know if your home has an upgraded kitchen, finished basement or new roof, etc., but it will give you a suggested range to price your home. The AVM will also provide you with a list of nearby recently sold properties. An AVM tool is available at http://www.forsalebyowner.com/appraisal.

5. Evaluate Your Research: Now that you have information about homes currently on the market, data on recently sold properties and a price range, you have all the data you need to compare your home to others in your neighborhood and local area. Evaluate the information you have learned and ask yourself how your home stacks up with the others. Be honest. What condition is it in and how does in compare in location, features and aspects like a remodeled master bathroom?

6. Live in the Now: One of the biggest mistakes sellers are doing in today’s market is pricing their home at price points of one, two or three years ago. The national median home price has dropped more than 15 percent from April 2007 to April 2008 (in markets in CA, FL and AZ the median home price has fallen by more than 20 percent!), and those that price their home too high will just see it sit on the market. The homes that are selling today are those that are priced competitively to other homes are on the market, providing buyers with the sense that they are getting “a good deal.”

7. Set the Price: The time has come. You now have a complete picture of your real estate marketplace. Set the price using all the information you’ve learned through the above steps.

Congratulations! You have reached a major milestone in your home selling process. Not only have you arrived at an asking price, you have become an expert in your local real estate market. Prospective buyers will be impressed with your sense of knowledge and honest assessment of your home’s value, and you’ll be able to communicate about its strengths and weaknesses as compared to other homes in your neighborhood, town and area.

For more information, visit www.forsalebyowner.com/info.

Courtesy of ARAcontent

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Not long ago, 60 Minutes aired a story entitled, “6 Percent,” and reporter Lesley Stahl posed the question, “Are they worth it?” The segment discussed full-commissioned Realtors commanding fees that can be up to six percent of the cost of the home, and compared them to less expensive new-age Internet-based brokerages that offer lower commissions and fees and cash rebates.

The online brokers she interviewed said, “No way!” They claim the Internet has cut the amount of time involved in and cost of completing a real estate transaction way down, and the savings should be passed on to the consumer; but the National Association of Realtors begs to differ. The organization points out that Realtors deliver significant value to consumers and that commissions reflect the usual cost of doing business.

“Home sellers who choose to compromise on one of the most important transactions of their lives aren’t getting the level of service they deserve. All the brokers do is list your property. They don’t bring you potential buyers,” says Hector Rivera, broker/owner of Virtual Real Estate Associates in Stratford, Conn.

He points out that when you hire an agent, not only will he or she list your property, they’ll market it as well. “Shortly after they put up a sign in front of your home, a lot of work goes on behind the scenes,” he says. “The real estate professional sends out postcards, places ads in the local papers, distributes the listing information to his or her referral network of agents, local and national, and plans open houses; and that’s just the beginning.”

“A good real estate agent also brings strong negotiation skills and unique knowledge to the transaction, which impacts the selling price of a property,” said Jeff Tomlin, manager of channel relations for Point2 Technologies, a software technology company specializing in online marketing tools for real estate professionals. “The agent’s experience and knowledge of the local landscape, the neighborhood and the property itself gives them and their client a very important advantage that a broker sitting at a computer screen miles away can simply not match. Typically, this translates into more money in the pocket of the home owner.”

According to the National Association of REALTORS 2006 Profile of Home Buyers and Sellers, the median price of a home sold with the assistance of an agent was $298,200 compared to $230,000 for FSBO (For Sale By Owner) sales.

Tomlin also suggests that accurate home valuations can only be generated with the help of an experienced real estate agent, as online home valuation tools are not privy to details that directly impact the value of the property.

“Intimate knowledge of the property’s condition, renovations or legal issues, property surroundings and planned developments in the area that might improve values in the neighborhood are few of the considerations only a local expert can bring to arrive at the best suggested selling price of a home,” adds Tomlin. Most importantly, a professional needs to study the qualitative differences between comparable properties for accurate home valuations, not simply the quantitative information.

“These days, the real savvy agent is also a neighborhood expert. And, he or she will market listings online using very advanced systems,” explains Tomlin. “While going at it alone may seem attractive, consider that a consumer may be able to list their home on a Web site or two, but they can never list it on thousands of real estate agent sites at the same time, and this is how market exposure is truly maximized to get the top selling price.”

“The Internet is where a lot of people are starting their searches, so you need to be there in a big way, particularly in the slowing market a lot of areas are experiencing right now.”

Tomlin points out there’s a right way and a wrong way to market a listing online and recommends homeowners seek out agents who know how to get their listing in front of as many people as possible. “Agents who belong to Point2 NLS (National Listing Service) network, for example,” he says, “have the advantage of being able to syndicate your listing to thousands of Web sites that consumers are using to search for homes, simultaneously, and for free.”

The software also allows your agent to display dozens of photographs, add virtual tours and provides access to neighborhood information so potential buyers will have at their fingertips important details they need to make a decision. In addition to showing up on the agent’s own Web site, the listing can also be syndicated to the Web sites of hundreds or thousands of other Point2 NLS agent sites in the local area, as well as to consumer search sites such as Google, Yahoo!, Point2 Homes, and dozens of other high traffic sites where consumers today browse for real estate.

A good real estate agent helps you achieve the highest selling price possible by getting the maximum possible market exposure. While an enormous number of eyeballs come from search sites such as Google, Yahoo! and classified ad sites like Craigslist, the cooperative advertising of listings between local real estate professionals (both privately and publicly) generates most of the exposure for home sales. Tomlin adds, “You have to remember that each of those local real estate Web sites has their own marketing budget and local advertising presence. Together, they drive a lot of traffic. Today, technology allows us to track that exposure so the consumer can truly benefit from the power of organized real estate marketing.”

To find the Point2 NLS real estate agent in the market you’re interested in, log on to www.point2homes.com. Agents interested in becoming members of the Point2 NLS network can sign up for free at www.point2NLS.com.

“With all the technology that can be used, real estate is still a personal business. It’s such a large investment, a lot of people also need the 1-on-1 connection to feel good about their purchase. It really makes a difference,” says Rivera.

Courtesy of ARAcontent

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Even a person not very skilled in carpentry, plumbing, and other traditional trades can improve the saleability of a property with modest effort and a few common tools.

One of the first things a potential buyer will notice when viewing your property is the condition of those around it. Encourage your neighbors to clear away children’s toys, junk cars, or other unsightly objects before buyers come looking.

Offer to mow the lawns of those to the left and right, or take their trash to the dump as an incentive. A small cash offer on successful sale will also motivate cooperation.

At the same time, show them you’re getting your own house in order. Mow the lawn carefully and repair any bare spots. Trim the edges. And invest in a few dozen inexpensive flowers and plants if the season permits it. The exterior is always what is seen first and first impressions linger.

Since a home inspection will almost always be done prior to a conclusive bargain being struck, take the opportunity to make those inexpensive plumbing repairs BEFORE showing the house. Some of the more expensive ones might wait, to be used as a bargaining chip. But fix that leaky sprinkler head that sprays the sidewalk and replace that dripping bathroom faucet.

Replacing carpeting throughout an entire house, or even one room, can be expensive. But getting it cleaned costs very little, typically. And repair any small damage or try to cover it with a piece of furniture. Eventually, you’ll have to show every flaw when you have a concrete deal. But it needn’t be the first thing they see. Replace those old welcome mats and small entrance rugs with new ones.

New screens are low priced and can make the exterior look fresh and new. To save even more, you can remake the screens with mesh and rubber kits, provided the frames are still in good shape.

Replace any cracked or broken windows. You’ll usually have to do this anyway as part of closing the deal. Of course, all the windows should be cleaned thoroughly to give that shiny new feel. Even a brand new house that’s dirty will fetch a lower price.

If you have air conditioning and heating ducts, replacing defective or worn conduits can get very costly. But many parts in a house that are not seen use silvered duct tape anyway, so patch any holes carefully to give a professional look. Replace old filters to give the appliances a newer look and the air a fresher smell.

A bit of spackle and a coat of paint on those rooms that have seen accidents needn’t cost a lot and don’t take a lot of effort. Be sure the work is done carefully, though, or it can come out looking worse than before you started.

A buyer that sees that you’ve made efforts to keep the property up will be more inclined to offer a better price. Think of the last time you bought a car. Didn’t you favor the one that was well maintained? You were probably willing to pay a little extra to get that one. They will be too.

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The process of finding ‘diamonds in the rough’ has been revolutionized by the Internet. You can spend hours on-line finding descriptions, prices, photos, and useful legal info about properties close by or thousands of miles away. Unless you restrict yourself to FSBO (For Sale By Owner) ads on eBay, Google Base, or Windows Classifieds, though, prepare to pay realtor fees.

Visit Realtor or estate agent businesses. If you can afford it, you can obtain an MLS, a multiple listing service, and get the same information they get. In some locations, a license is required, even if you have the cash.

Even if you use the web to find a great value, be prepared to do some ‘leg work’. The only way to judge properly is to visit the property and the surrounding area. Is the neighborhood maintained in a way that won’t depress the selling price? While you’re driving around, look for FSBO signs, For Rent signs, and talk to some of the neighbors.

The person next door, might know something about that yard that turns into a swamp after a few days of rain. Be prepared to make more than one visit, in different kinds of weather and at different times of day, if possible. Property, land and houses, look and act different in the cool of the night than they do in the heat of the day.

And the best way to check for a leaky roof is to go when it’s raining — exactly the weather you don’t enjoy evaluating property in. Neither will your competitor for that property. Going that one step further puts you ahead in the race. Information is power.

After the informal inspection, you can strike a contingent deal. ‘Contingent’, here, means dependent on a satisfactory professional inspection. Find someone experienced and reliable, even if you have to pay a little more. The price will be repaid many times over, especially if you use them regularly in the future.

Learn the craft yourself if you have time and interest, but at minimum learn at least enough to keep the inspector honest. Most are, anyway.

Review the report carefully. It’s not required that everything is 100%, but every major and minor flaw should be recorded. Leaky plumbing or roofs, stained carpets, damaged walls or floors, inoperative air conditioning or heating systems, etc. Look especially for any standing water in basements, near foundations, etc.

Everything is negotiable, so there’s no rule about who pays for repairs, if anybody. But information is power. Still, be realistic. Very few properties, even newly constructed ones, are perfect. If they are they’re expensive enough to eliminate your profit, unless you plan to keep the investment for an extended period.

Happy hunting!

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Assuming the property contains wood, first and foremost is a separate termite and pest inspection. Most ‘home inspectors’ don’t check for this, concentrating instead on mechanical and others aspects. Termites, carpenter ants, even mice can weaken walls and floors, chew through wiring, and ruin attics and shelving.

Professional inspectors check every aspect of a property and structure.

Starting with the foundation, they look for large cracks (almost all have minor ones), check for level ground, and influx of water. Evidence can show up as efflorescence — a white powdery material which indicates penetration points, mold or mildew (black stained areas). Some will use lasers to check level and cracking and some even use meters to check for radon gas concentrations.

Houses sit on top of foundations and that flooring has to be inspected for proper joints, angles, and materials used. From those floors rise walls which are similarly subject to incorrect framing and potential water damage. Inside the walls, plumbing and electrical systems are inspected for damage, non-code compliant construction, or simple age or wear. Any leaks are noted and pipes inspected for rust, lead, or other chemical concerns. Flow rate and pressure are sometimes measured.

Electrical systems get a thorough review, checking for faulty wiring, uncovered switches or receptacles, incorrect grounding, inadequate circuit breakers, or bad GFCI trips. The latter are those little red buttons often seen in the middle of outlets. They are somewhat like miniature circuit breakers built into the receptacle itself.

Working up to the attic, framing is checked for angles and strength and the area checked for air or water leaks or damage. The underneath of the roof is examined for tears or holes in papering and proper seal where vent pipes protrude outside.

Up on the roof the inspector will check for holes, loose tile, bad flashing or any other weakness that leads to lack of protection against the elements.

Around the house outside all faucets are tested for leaks and proper flow, inside all heating and air conditioning systems will be checked for duct leaks, filter condition, and adequate capacity and flow. Thermostats get a thorough going over.

Any inbuilt appliances, such as stove and water heater are checked for compliance with standards. Installed propane or wood stoves and piping are checked for physical integrity and proper function.

Carpets are checked for inappropriate levels of wear or damage and tested for mold or water damage. Any paint damage, particularly due to water infiltration, get noted.

All these items, and many more, are noted on a report available to whomever ordered and paid for the inspection. To the potential buyer, defective items can be used as bargaining chips when negotiating price and other terms of sale. But the inspection can also benefit the seller by allowing for the opportunity to repair or improve items before putting the property on the market.

To either party, an inspection for a few hundred dollars can save thousands during the process. Information isn’t just power, it’s money, too.

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‘Flipping’ is the practice of buying property, then selling for — hopefully — quick profit. The flip side to flipping is keeping property for the long term to take advantage of tax incentives and capital appreciation. Calculate the total costs vs amount saved from tax write off. Don’t forget to include interest charges, property taxes, insurance, repairs, etc., along with the regular monthly payment.

Remember that property values have risen in most markets for several years. But with interest rates increasing no one can predict how much higher they’ll go nor for how much longer. No gain without risk!

Apart from gains from a tax write off and appreciation, some costs can be offset by renting the property. But, consider the amount of time and cash you have to find tenants, manage the property, and pay for or perform repairs.

Foreclosures are another investment avenue, but also not without risk and often requiring substantial cash outlay. A foreclosure occurs when a property owner is no longer able to make payments on a mortgage, usually over a period of several months. But seldom are foreclosed properties all gain and no pain.

Foreclosed properties tend to be in need of repair — someone about to lose their home isn’t usually incented to maintain it in pristine condition. Be prepared to spend time and effort bringing the home back to salable condition, if you have the skills, or laying out cash, time, and effort to find a reliable contractor.

Similar considerations apply to investing in abandoned property, with some possible additional legal hoops to jump through. Foreclosed properties usually have clear title. The lender (a bank, mortgage company, or other financier) reclaims title as a part of the foreclosure process. In the case of abandoned properties, it may not be clear who has title. Factor in the additional time and cost for title searches and possible legal action.

For those who want to take advantage of profit opportunities in real estate, but without actually laying out cash, signing dozens of documents, or worrying about the physical property, there are purely paper investments. As a result of computerization and the explosive expansion of investment options in the 1980s, several types of ‘monetization’ of real estate came into existence. REITs (Real Estate Investment Trusts) are one type. There are others — mortgage backed securities, property bonds, trusts, mutual funds, and stocks oriented specifically toward real estate. Before investing in any of these ‘non-property’ options, talk to a broker.

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So, here are some suggestions about how to conserve your cash, while getting the best rate possible on that terrific deal you went to all the trouble to find and negotiate.

Among the many costs you’re going to be expected to cover —  one way or the other — are an initial down payment on a mortgage and closing costs. Closing costs break down into mortgage, fire, and hazard insurance, title expenses, and a dozen other high ticket items. Lucky for you the seller pays the agent!

So the first step after agreeing on a deal is to get favorable financing. Bzzz! Wrong answer. Get favorable financing BEFORE you agree on a price and decide who pays for what. Assuming you intend to finance, and if you aren’t you don’t need to read this, shop around for lenders.

Banks, mortgage companies, on-line financiers, and others all compete for your business. Make them earn it by looking for the lowest rate you can obtain for your credit rating. Negotiate fees required and the dozens of charges that lenders tack onto the loan — sometimes before even agreeing to fund it. Don’t pay the lender a large ‘application fee’, unless you have seriously bad credit and have no other option.

Repeat the process with everyone else involved in the deal. Title companies often have high fees, but you’re not required to use the one an agent or the lender recommend. You’re free to use whomever you wish. Watch out for ‘rush delivery charges’ – often $50 or more to have a package of a dozen papers sent across town — and similar fees. You’re not required to give anyone free rein when they’re spending your money.

Do the same thing with whomever the lender and title company recommend for insurance. You’re not required to use the one they like, but they will usually try to bully you into accepting it because they’re busy and it’s easier for them. Remember, though, you are paying them. They’re looking out for their interests — you have the right to do the same.

When you talk to the lender, ask what options are available with your credit rating. You can often obtain 5% down, and sometimes even no-down, loans — but beware of the high interest rate that sometimes accompanies them.

Other financing options can be found by those willing to wait and to shop around. Some sellers and lenders will allow you to assume an existing loan. It’s also possible to negotiate a deal in which the seller agrees to pay a larger percentage of the closing costs. In rare cases, they will pay all the closing costs, but usually by rolling it into your loan.

The last few years have been largely a seller’s market, so this has been less common. But the situation is changing. Even in a seller’s market, though, not everyone is in a position to be rigid. New employment opportunities, layoffs, unexpected expenses, a death in the family, and a dozen other reasons can give a seller a big incentive to move quickly. That translates to a willingness to negotiate a fast deal for the best price they can get.

It’s your money. Keep as much of it as you can by shopping around and not letting anyone rush you into taking a bad deal.

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When first looking for property you have to consider the amount of ready cash available, the state of the current market, as well as your own level of experience with the many aspects of investing.

The first lesson of risk management is: know the law. Whether a novice or a savvy investor of long experience, few things can put your investment at greater risk than ignorance of the rights and requirements of regulations. No need to become an attorney, but a working familiarity is a must.

After investigating the current market — what’s available at what price, and what’s the current level of buyer interest — judging the likely future is required. Property values have been rising in most markets for several years. In a rising interest rate environment, that can’t last forever. No one knows with certainty how long the trend will continue, but you can look at some signs.

Is the economy in general still on the upswing? Are employment prospects good for most individuals? What is the rate of new home construction, relative to the last five years? All these and more are good indicators of whether property values are more likely to continue to rise, level off, or even see a correction.

Once you’ve purchased a property there are several ways to minimize the risk of seeing your investment wind up ‘under water’. At the moment of purchase, make every effort to invest in a large down payment. Seriously consider putting in at least 10%. You’ll create instant equity and usually get a lower interest rate.

That level of initial outlay decreases your liquidity — you have less cash after the deal is closed — but there are few alternatives that have the return rate, low level of risk, and degree of capital appreciation of a real estate investment.

When looking at funding options, consider how long you intend to keep the property. ARMs (Adjustable Rate Mortgages) get you in with less cash and an attractively low relative rate. There are 1 year ARMs, 5 year, even 7 year — the number signifies how long the offered rate is good for, after which the lender adjusts it according to prevailing interest rates.

But if you intend to keep the property longer than the initial period, you can see that attractive rate climb several percentage points. Unless you sell, or have paid down the principle substantially within that time frame, you can see yourself saddled with much higher monthly payments.

At the same time the ARM rate is going sharply up, property values are under pressure to level off or even decrease — because of the rise in interest rates. Your investment gets hit twice. Of course, it’s possible for rates to go down, but that’s less common and refinance is usually toward a fixed rate, in those cases.

There are insurance options that can cover the increase in payment in such scenarios but if you pay more than a couple of years of premiums, they are usually not worth the extra outlay. Better to use the extra funds to pay down the principal by making more than twelve annual payments, or paying more per month than the minimum.

If you can’t come up with a large initial down payment, weigh the value of continuing to rent versus any tax break you get from owning a property acquired with low or no down payment.

So, invest as much as you can up front, make at least one extra payment per year, lean toward fixed rate mortgages of the minimum length you can afford. A 15 year mortgage pays down the principle quicker, so you spend less on interest, increases your equity rapidly, and usually carries a lower rate.

Take a long term view; real estate is still one of the least risky, highest paying investments around.

Tips on Managing Risk

Investors have a hard life. Rising insurance rates, legal liability, security concerns and increasing interest rates may not be actually conspiring to give them early heart attacks, but it can seem that way. Managing risk is in large part about how to lower uncertainty by dealing appropriately with those and other stress factors.

Start by exercising common sense and gathering as much information about the local market and the general economy in addition to the specifics on an interesting property. Study the numbers on rates of new home construction and the ratio of new to existing property sales. Narrow down to your local market(s) by looking online at existing comparables, but also talk with other local property owners about their concerns and plans.

When building new structures, manage risk by reviewing trade area demand — by demographic and daytime population for commercial structures, for example. Look also at site characteristics and examine local competition and contrast with regional differences. Take some time to find out about upcoming environmental regulations.

Be sure to set aside the needed amount for insurance, and err on the side of too much insurance rather than too little, if minimizing risk is an important goal.

Go into a deal with the maximum available capital by not spreading your resources too thin. Keep borrowing low and avoid ARMs (Adjustable Rate Mortgages) unless they’re longer than three years and you expect to sell well within that period. ARMs are inherently higher risk, and the ‘interest only’ type even more so. Rates tend to rise more quickly than they fall, over the long term.

If you have an ARM and rising monthly payments occur, due to interest rate increases, while the market price is dropping (as may soon be the case), consider selling. Even stocks have to be sold sometimes during a period of declining prices. Capital preservation is important for long term investing, and part of that involves keeping liquid during a ‘market correction’.

Some lenders allow borrowing more than 100% of the value of the property. Unless you can use the extra cash in a way that more than compensates for interest and other charges, that’s burdensome debt.

Take the time to seek out trustworthy and competent people — don’t settle for an uncooperative or arrogant Title company or an unreliable contractor because you’re busy. Think in terms of long term relationships. Otherwise, the long term will involve counting financial losses.

Risk can be spread by forming partnerships and, in come cases, by incorporation. Incorporation can allow you to separate personal from business assets, protecting you in case of severe decline. But there are limits — you don’t automatically get to walk away from debts by being incorporated. Partnerships though, if you can find reliable and compatible individuals with whom you’ll feel comfortable over the long haul, can strengthen your position.

Partners can help fill in gaps in your knowledge and experience, provide additional capital and someone to bounce ideas off of. But choose carefully. Differences of outlook can lead to stagnation when it comes time to take action. Remember, risk can never be reduced to zero.

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