Becoming A Battle Hardened Real Estate Veteran Without All The Scars

Step 1 is always to determine the fair market value(FMV). As a real estate investor, you can always buy properties at the FMV. My question is why would anybody want to do that? Through careful selection, you can always find properties that are priced below FMV, regardless if they are existing or if they are a preconstruction project. The best way to determine FMV is to work with someone already familiar with the area or determine yourself through local websites showing recent sales histories.

Step 2 is to then determine the market trend for the area for which there are two critical pieces: 1) is the average price increasing AND 2) is the volume of sales increasing. If both are moving in your favor, then you have the comfort of knowing that the right trend is in place to keep prices moving forward. In stock market investing, there is the saying that the trend is your friend and traders frequently observe price and volume data to confirm the trend. If a hotly priced real estate market shows signs of dropping in volume, be very careful.

Step 3 is to learn about supply, especially in the preconstruction marketplace. In some areas, there are very few projects on the books and in others, there are 15,000+ units expected to emerge within 1 zipcode, in 1 year. Same is true for investing in houses. In you are competing with a bunch of new houses that are coming on-line, then rapid price escalation may be limited. For most savvy investors, they like to see lots of demand with very little supply which is nothing more than common sense.

Step 4 is to make your OWN opinions of the macro conditions of the local and regional marketplace. So, for example, if you are a strong believer that real estate is overvalued in the target area, why would you ever consider investing? On the other hand, if you believe that market forces will continue to escalate in the market, then why would you not be actively looking? As an example, some people believe that the graying of America is just now starting to drive people to warm, more attractive climates. Even though property values are high in these areas right now, are we going to see 20+ years of additional migration to them? You have to decide for yourself because we won't know the answer for another 20 years!

Step 5 is one of the most important risk management tools available to the investor in real estate. Each property has typically an inherent rate at which it can be rented, even if that is not your intent. By looking at rental rates, relative to the amount of principle, interest, taxes, and insurance (PITI) that you will have to pay, then you can understand the amount of cashflow that may be required to support the property. If your objective is to produce cashflow, then you need to be cashflow positive very quickly. If your objective is capital gains and the cashflow is negative, then you now understand what you may have to support on a monthly basis if things don't work out.

Deferred maintenance then becomes our Step 6. For an existing property, how much maintenance has the previous owner neglected that you will need to catch up? Be careful here since this can be one of the major places to get nasty surprises.

And now I saved the best for last: Step 7 is to determine your own personal risk tolerance. Some new investors look at a deal and only see the positive. This is a huge mistake. EVERY REAL INVESTOR I KNOW HAS LOST MONEY IN A DEAL but they gladly will do more. Why? They understand their risk's going in, they understand how to limit their downside, and the gains are much larger than the risks they are taking. If you were standing beside them and saw what they saw, you would gladly take the risk as well and rapidly ignore any small losses that you experience.

Hopefully this has given you a good start at learning how to analyze a potential opportunity. Obviously each of these steps requires additional work or training but they are what separate the new investor from the seasoned, battle tested veterans.

As part of a new web site that we just launched, http://www.GetPreconstructionDeals.com, I get repeated requests asking if a particular deal is good or not. While we can't answer this for individual projects, we can certainly look at what HAS to get done by the investor to dramatically increase the odds of a successful transaction.

Chris Anderson is a leading authority on preconstruction real estate investing. Get his 4 day e-mail course and a 33 minute video free today! Visit http://www.GetPreconstructionProfit.com & http://www.GetPreconstructionDeals.com.

In addition, Dr. Anderson is the on-line training coordinator at the Van Tharp Institute, a group dedicated to providing world class training for investors and traders.

There is something emotionally charged about the buying and selling of New York high-end real estate. How else to explain the juggernaut of reality TV shows about high-end brokers?

After 30 years of marriage, Sharon and Michael Newman decided it was finally time to move from the Catskills to New York City.

On blocks near Kissena Park streets are quiet, houses are small, and the electricity that charges the atmosphere in downtown Flushing is nowhere to be found.

A five-story, seven-bedroom house in Brooklyn Heights has sweeping views of New York Harbor and the Manhattan skyline.

Demand is so intense that there are waiting lists in some buildings, and a few landlords report that eager renters are even bidding up rents.

Sales at the very high end of the market barely missed a beat in the recession. But that prosperity hasn’t yet trickled down.

A Flatiron condo, a Midtown South co-op and a Brooklyn Heights carriage house.

A four-bedroom ranch in Montclair, N.J., and a four-bedroom colonial Cape in Babylon, N.Y.

For a century, Roosevelt Island housed a grim penitentiary. It was demolished in the 1930s.

More borrowers are opting for fixed-rate loans with terms other than the standard 30 or 15 years, especially when it comes to refinancings.

Two more glass skyscrapers are added to a group of towers on the waterfront of Long Island City.

Insurance coverage for a co-op unit; when a tenant is ‘blacklisted’; a co-op is smaller than estimated.

The market for $500,000-to-$600,000 houses in Westchester has become especially active.

A shaky real estate market means more sellers are providing buyer concessions, from gift cards to help with paying property taxes.

Houses of worship are adaptable to residential and other uses as congregations dwindle.

The settlement reached last week over questionable mortgage practices by major American banks hardly cracks the iceberg that is the foreclosure mess.

Under the settlement, nearly two million Americans could benefit from mortgage relief from the nation’s biggest banks.

A cold war-era satellite relay station is for sale in California after a Silicon Valley mogul gave up on plans to turn it into a weekend home.

How can I make my front porch more appealing to buyers?

Court hearings meant to protect New York homeowners from foreclosure are hopelessly slowed by endless paperwork and requests for additional information.

The Bay Area and Silicon Valley expect the windfall from the Facebook stock offering to make their in-demand region even hotter.

The house, designed by the architect Eric Fisher, looms over the street like a big industrial arm.

A town house in Dallas, a midcentury modern in Rhode Island and a Tudor in Denver.

Prices in some parts of the country are still off by as much as 25 percent from their 2007 peak.

Trinity Church is the largest landlord in Hudson Square and is part of the effort to rezone the area to residential from manufacturing.

Rising oil prices and a boom in shale exploration are leading companies to add office space in the Houston area, most notably Exxon Mobil.

Ms. de França is the president and chief executive of Douglas Elliman Development Marketing, which focuses on new residential developments.

Meet the real estate broker’s interns: an ambitious group willing to do anything, earn nothing and wake up early on a Sunday to fluff the couch cushions at open houses.

A Flatiron condo, a Midtown South co-op and a Brooklyn Heights carriage house.

A four-bedroom ranch in Montclair, N.J., and a four-bedroom colonial Cape in Babylon, N.Y.

Homes in Dallas, Rhode Island and Denver.

Compare the cost of renting and buying equivalent homes.

For recently divorced men, a new breed of decorators offers help navigating a strange new world.

Plants that light up the winter garden can be found at Broken Arrow Nursery in Connecticut, which has long been a favorite of gardening geeks.

A sister in need drew the painter Beverly McIver back home to North Carolina, unaware that a new beginning was in store for both of them.

A jewelry designer finds striking new objects for storage.

Timothy Sakamoto and Jochen Repolust are part of the small but growing niche making mobile apps focused on specific works of architecture.

To promote an auction of 20th- and 21st-century design, the interior designer Stephen Sills has created a preview exhibition in an apartment at the Apthorp.

Fishs Eddy now sells plates acquired from the archives of the now-defunct Syracuse China Corporation, many more than 100 years old.

The designer Russell Greenberg creates custom baby rattles with ends shaped like profiles of mom and dad.