3 Real Estate Investing Rules to live by (continued)

in my post from earlier today, I mentioned a friend, who has made his fortune in real estate here in Maricopa County which includes Phoenix, Scottsdale, Tempe, Fountain Hills, Peoria, Glendale, Paradise Valley, and the communities of Desert Ridge, DC Ranch, Troon, Grayhawk, Estancia and Silverleaf

and teaches others his secrets to success.

Here are 3 of his rules to live by explained.

1) Make sure that your primary residence is not an investment; it is primarily a place for your family to live. A home offers tax benefits. If financed correctly, it is a hedge against inflation (more on this another day soon) and can provide some long term capital appreciation; but an investment last. Thus you are less affected to short term fluctuations in the market.

2) A rental property must be rented or it can be a very expensive, thus not very profitable investment. He teaches people to own rental properties in places=where there are young professionals, a college town, or in an apartment community where there is an on-site leasing and management office with a excellent "low vacancy" record. Some communities are even offering some form of rent guarantee. Don't buy a large home, with a big mortgage, to rent to families. These can be difficult to rent, and costly if vacant.

3) Speculative Investing has to be done prudently, with a different type of real estate than completed single family homes in your "backyard". Commercial real estate (you don't have to be rich) with tenants in a great place to start that will keep you diversified and offers income to pay for your monthly mortgage.

Real Estate can be enriching in more ways than one; but it must be done in a diversified manner and must be financed correctly or what goes up can come down much faster.

I encourage all the faithful members to add any pearls of wisdom and experience that they have learned in what I hope has been and will continue to be a personally professionally rewarding career.

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