Single Unit Houses continued

Buying and managing a single unit house has another advantage: the business can be done in one's spare time. Research can be performed on the internet and properties can be viewed on your schedule when you have time. Real estate brokers and home owners are very active on weekends showing properties through open houses.

The beginning investor will need a few things:
A desire to succeed as a real estate investor
A decent credit rating
Sufficient income to qualify for a mortgage
An attorney and insurance agent
Basic knowledge of:
   building systems: electrical, plumbing, heating, roofing, foundations,
              structure, windows,  
    repairs and construction methods
    mortgages
    legal concepts
    government regulations
    marketing to renters
    tenant relations
    ability to do some repairs oneself
    ability to work with and deal with contractors
I emphasize basic knowledge. This basic information can be found in books, magazines, television shows and the internet.

Reasons to Invest in Real Estate

A property owner can realize numerous benefits from a real estate investment including:

• Cash flow from the operating profits
  
• Growth of value of the property
  
• reduction of the mortgage principal  through the mortgage payments
  
• favorable tax benefits from depreciation
• inflation adjustment as rents increase with inflation
  
• transparency of ownership and operations

Single unit houses continued

Buying a single unit rental house can be a great way for an inexperienced aspiring real estate investor to “get their feet wet” in the business.

• A single unit house or condominium is one of the smallest parcels of rental real estate that someone can buy. This small sized transaction will require the least amount of capital as compared to other real estate purchases.
• The single unit house marketplace has a large inventory and properties are constantly changing hands. In 2012 a large selection of properties is available on the market. Currently the problem with home foreclosures and oversupply is a national problem. This problem offers opportunities for the knowledgeable investor as a great deal on single unit house can be found.
• A constant demand exists for the rental or purchase of single unit houses but the demand will vary by market. The continuously growing US population is a long term driver of demand for housing nationally.
• Favorable financing is available to buyers of single unit houses. The United States government underwrites most of the mortgage market for single unit houses through the agencies FHA, Fannie Mae and Freddie Mac. Other government programs exist to add financing alternatives to this market.
• With a single unit property you only have one tenant to deal with and only one unit to renovate and manage in the future making the whole process easier (but not necessarily easy).
• Government regulations impact single unit houses to a lesser degree as compared to multifamily or retail properties.

The skill set and procedures that are required to purchase a single unit property are very similar to the skills and procedures required to purchase  larger income producing properties.

Going through the process of finding, analyzing, investigating, purchasing, managing and selling a single unit property is an excellent exercise and experience in the real estate business.

Once you go through this experience you will have a good idea whether or not you really want to continue in the business.

Single Unit Houses

One way to get a start in the real estate business is through buying and owning a single unit house. The basic idea is to buy low and rent the house out. An important concept in real estate is that money is made "on the buy" This means you can make money by buying real estate at a price that is low. A low price means a price that is low as compared to the current market or to the potential value that the property has. When buying single family houses to rent out  you must become skillful at finding properties that are low priced. You must also become familiar with the rental rates and demand for single family houses in the market area that you are operating in. Almost every neighborhood has a house that needs work and can be purchased at  a bargain price. In 2012 the housing market has a glut of houses that are either in foreclosure or nearing foreclosure. The exact market conditions vary  substantially by states, towns and neighborhoods. This method requires a lot of homework, legwork and telephone calls in order to locate a "good deal". It is important to specialize in a market area so you can learn that market. You can become familiar with house prices, demand for rental houses and rental rates by zeroing in on a specific area.

It is possible to purchase a house with little money down. Even if the seller is selling the house without receiving a down payment, the purchase will still require funds to pay for an attorney , title insurance, property insurance etc.
There are a lot more details to this business including:

•  property inspections
•  budgeting for repairs and renovations
•  financing
• insurance
•  marketing to tenants and tenant selection
•  legal concepts
•  bureaucratic - government issues
•  ongoing property management  

Before purchasing any house, you must perform a detailed financial analysis that includes  all costs of operation, rental market rates and demand for houses and legal issues related to leasing and renting houses in the market area. The current condition of the house must be analyzed in detail. The costs of making required repairs must be identified.

If you decide to buy and rent single family houses you will begin to learn about buying, analyzing  and managing real estate in general. The lessons learned while buying one or more single family houses will help you buy larger properties and can form the foundation of a career in investing in real estate.

The World of Real Estate

Both the words “realty” and “real estate” have their origins in the word “real” meaning true, existing as fact, not imaginary, genuine, not counterfeit, artificial or imitation, The words have their origins in the late 1400’s. The word Realty has only one meaning: Real Property or Real Estate. The world of real estate encompasses most human endeavor. As all real estate is based on land and the land is the earth it can be said that all human activity has its foundation on real estate. All land based human activity is related to real estate. The world of real estate touches many spheres of human activity including some areas you may not have considered such as:
Institutions: schools, universities and hospitals
government buildings
places of worship
transportation modes including highways and railways
Parks and recreation areas

Robert’s Realty Review is concerned with activities that an investor or Principal undertakes in order to make a profit such as investing in real estate development or income real estate. This letter will discuss real estate brokerage only as it relates to the above. The words real estate and property will be used interchangeably.

Primary Property Types

Private residence: a single family home usually owner occupied but may be rented to tenants.
Commercial Real Estate: real estate operated for business or investment purposes. The real estate usually generates a profit for the property owner. An exception is property that is 100% owner occupied and may not produce any profit for the owner (the property may produce

tax savings for the owner) . An example is an office building 100% owned and occupied by its owner.

Commercial Real Estate can be subdivided into the following areas:

Multi family: Also known as residential real estate. Buildings composed of more than one residential unit in a single structure. Includes real estate projects composed of

two family apartments to hundreds of units and more. May be composed of a number of separate buildings in the same project. Includes rental apartment buildings, condominium and co-op buildings

Office: All types of office space from a building containing a single small office to major office towers.

Retail: real estate where stores conduct sales of goods to the general public.

Industrial: factories and manufacturing plants and large industrial installations.

Warehouses and Lofts: Commercial buildings used to store goods or for light manufacturing and assembly and distribution centers

The Beginning

Well, here goes !
This is the first entry of my blog. I plan to produce an informative interesting web log discussing various aspects of real estate. The emphasis will be on commercial real estate investing in the New York Metropolitan Area. This site will also serve as a communications channel to current and potential clients of my real estate business. The topics will range in complexity from very basic concepts to more advanced discussions. My real estate career spans 30 years. During that time I have been involved in many aspects of the business including:

• property acquisitions, management and development,
• residential and commercial sales, brokerage and leasing,
• various aspects of finance including in-depth financial and market analysis mortgages and syndication
• general contracting and maintenance.

I hope you enjoy this site and take away something positive from it.

Best regards,

Robert J. Kafarski ARM, CCIM