BUYING AND OWNING REAL ESTATE: PRIVATE EQUITY (B)

It is also worthwhile to complete a thorough due diligence on your prospective investment. This process can include having reports completed on the physical and environmental condition of the property, and having an appraisal performed. Your lawyer will be able to obtain a variety of search results and will assist in examining the title. Depending on the complexity of the purchase, there are many other tasks that may be required.


There are many costs related to due diligence and the purchasing process, so be sure these costs become part of your financial analysis. Some typical costs include lawyer's fees, financing fees, appraisal costs and other administrative fees.


Don't think that your job is done after your purchase; here are some things you need to consider after purchasing your piece of real estate:


* You should determine how you are going to manage the investment. Will you do it yourself or hire a manager? Remember that cost accounting will be required.
* Tenant relationships are critical, so always respect their requirements and maintain a working business relationship with them.
* Remember that if you hire a property manager, they are not managing the long-term strategy of the property, unless it is specifically agreed upon that they will handle that role. It is up to you to ensure the long-term viability of the investment and to instruct the property manager with respect to strategy, such as redeveloping or selling the property.
* The decision to sell is as important as the decision to buy, but remember that there will be trading costs associated with completing a sale.


Source: Ian Woychuk, Investopedia.com