Planning For Long-term Real Estate Investing
When it comes to investing in real estate for long-term purposes rather than short term
, you may think that there may not be a lot of planning involved. After all, how complicated can it be? You just pay for the thing one way or the other for the next 20 or 30 years, then sell it. However, while this is the basic idea behind long-term real estate investing, a little planning can help you make the most out of your investment regardless of how long you keep it.Take Bob and his property, for example. Bob purchased a property in Atlanta. It was in a nice neighborhood that was well-kept and actually was doing pretty well in the real estate market despite the slump. However, Bob was a landlord by trade and did not plan to live in the property, and he ran into a serious pitfall. He wanted to find some great tenants to live in that property and rent it from him either as a long-term rental or an extended-term lease option. He did a lot of work on the property to make it attractive enough to bring in this kind of serious tenant, and the place looked great. However, turns out that neighborhood has strict HOA (home owners association) covenants preventing rentals, which meant that unless Bob wanted to live in that house, he was not going to be able to rent it or lease-option it. Ultimately, he sold at a property he had loved and planned for at a huge loss just to get out of the payments.
Bob had the right idea. He had multiple ways to maintain his ownership of the property in place (rental or lease option) and he had done the research to determine what would make that type of scenario viable. However, he did not finish out his research, and it ended up meaning a major loss for him. Had he simply done a little more background research on the property, he could have avoided the entire mess by investing in a neighborhood with looser rental codes or one that would allow him an exception and there were many of this type of neighborhood in the area, I should add.
Because in theory long-term real estate investing is simpler than some of the recently-popularized short-term options, many people just see a good deal and seize it. However, since you are going to be living with this property for decades in many cases, you need to actually do more research on it than you would if you were going to hand it over to someone else in 5 years or less. Any problems that develop will be yours, because you are going to own that property for the foreseeable future. You want to check out all relevant guidelines, including zoning options and HOA requirements, as well as any existing issues with neighbors, like easements or potential for easements, and property issues like trees and landscaping problems. If you do end up selling off the property sooner, these things may not be as much of an issue for you, but since you are planning to own the real estate for a while, you need to behave as if it will be yours for a long time to come.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.
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