How to make money in NH real estate investing
There are many opportunities in NH for investors including bank owned properties, foreclosures and short sale properties. Prices have fallen in New Hampshire and there are many NH real estate buying opportunities for NH investors.
Lower Your Taxes
incentives for real estate investors can often make the difference in
your tax rates. Deductions for rental property can often be used to
offset wage income. Tax breaks can often enable investors to turn a
loss into a profit.
For which items can investors get tax
breaks? You could claim deductions for actual costs you incur for
financing, managing and operating the rental property. This includes
mortgage interest payments, real estate taxes, insurance, maintenance,
repairs, property management fees, travel, advertising, and utilities
(assuming the tenant doesn't pay them). These expenses can be
subtracted from your adjusted gross income when determining your
personal income taxes. Of course, these deductions cannot exceed the
amount of real estate income you receive. In addition to deductions for
operating costs, you can also receive breaks for depreciation.
Buildings naturally deteriorate over time, and these "losses" can be
deducted regardless of the actual market value of the property. Because
depreciation is a non-cash expense -- you are not actually spending any
money -- the tax code can get a bit tricky. For more information about
depreciation and various tax alternatives, ask your tax advisor about
Section 1031 of the U.S. Tax Code.
Have a Positive Cash Flow
are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax
positive cash flow occurs when income received is greater than expenses
incurred. This sort of situation is difficult to find, but they are
usually a strong and safe investment. An after-tax positive cash flow
may have expenses that outweigh collected income, but various tax
breaks allow for a positive cash flow. This is more common, but it is
generally not as strong or safe as a pre-tax positive cash flow.
of what kind of real estate you choose to invest in, timely collections
from your tenants is absolutely necessary. A positive cash flow --
whether it be pre-tax or after-tax -- requires rental income. Be sure
to find quality tenants; a thorough credit and employment check is
probably a good idea.
the most important factors in determining a solid investment is the
amount of equity you are purchasing. Equity is the difference between
the actual worth of the property and the balanced owed on the mortgage.
Benefit from Growing Equity
investing in real estate is relatively complex, it is often worth the
extra work. When compared to other financial investments, like bonds or
CD's, the return on investment for real estate purchases can often be
The key to real estate investing is equity.
Determine an amount of equity that you want to achieve. When you reach
your goal, it's time to sell or refinance. Determining the proper
amount of equity may require the assistance of a real estate
Avoid 12 Common Mistakes Made by Novice New Hampshire Investors and Ensure High Rates of Return!
estate investment has provided many investors with positive cash flow,
tax benefits and satisfaction of making an impact in others lives. Like
any investment however, NH real estate has intricate nuances and market
trends that when ignored can cause an investor tremendous heart ache.
many first time investors are willing to part with their hard earned
cash without taking the time to study their investment. They rely on
traditional trends and gut feelings. Before you risk your investment
take the time to learn all you can about your market. By aligning
yourself with the right professional you can avoid these 12 common
mistakes and you’ll ensure an excellent return on your investment.
property can be one of the most rewarding aspects of your financial
portfolio. Be certain to have all your ducks in a row before you
invest. Do your homework! Consult with a professional real estate agent
and protect yourself from the hidden troubles that can plague first
- Failure to Determine Your Time Need
- Cash flow, capital appreciation, tax benefits, loss of management,
equity paydown and pride of ownership are just some of the things that
need to be addressed before you make that investment. A service minded
real estate professional can be a tremendous asset by taking the time
to evaluate your needs and making sure you’ve got all your bases
- Not Checking out the NH Seller or Sellers Agents Numbers
- Claims of extremely high rates of return run rampant in real estate
investment. Don’t get caught up in the excitement - check everything:
rents, payment history, taxes, expenses, deposits, future
modifications... everything. Make sure you have the right agent...it’s
like having a good insurance policy against overlooking all the
seemingly insignificant but very important details.
- Forgetting You Are Buying a Business -
Owning investment property carries with it a great potential for
creating wealth and... some potentially difficult decisions. Evictions,
re-investment into the property and time management all need careful
consideration. Remember this is not a ‘hands off’ business.
- Avoid Negative Cash Flow
- Property that eats cash every month can drain your working capital.
This can create stress, frustration and become quite painful.
Predicting constant appreciation is extremely difficult if not
impossible for the unseasoned investor. A strain on your cash flow may
cause you to sell the investment before the benefits of ownership are
- Failure to do a thorough Inspection
- Look under every rock! Hire a professional inspector. Ask the tenants
about pest problems, structural damage or reoccurring problems. Don’t
overlook anything! A value driven real estate professional will help
you find the right inspector and can help you avoid costly mistakes.
When investing your hard earned money be sure and use sound business
- Failing to Have Adequate Insurance -
Investment property brings liability. Tenants, cars, parking lots,
cleaning facilities, property liability - the list is quite extensive.
Adequate insurance coverage is an absolute must! Be sure to consult
with an insurance professional and protect your hard earned assets.
- Inspect, Approve, and Confirm All Documents -
The list of documents that need to be proofed can be overwhelming to
the first time investor. Building permits, zoning laws, rental and
lease applications, health licenses, laundry leases, underlying loan
documents, CC&R’s, by-laws, title policies, mineral leases,
inspection reports, purchase contracts, insurance.. don’t attempt to do
it alone. The right professional can remove most of the stress and
bring the transaction to a conclusion smoothly.
- Get a Bill of Sale For All Property Involved
- Many types of personal property (appliances, furniture, fixtures,
etc.) can be involved in an investment sale. Be very detailed -know who
- Charge Fair Rents -
Vacancies, turnovers and lease terminators are your biggest expense.
Charge fair rents, treat your tenants with respect and respond as
quickly as possible to their needs. It’s a lot less costly in the long
run to take care of the little problems before they become big
problems. Vacant property is your Achilles heel.
- Select Qualified, Good Tenants From the Start
- Take the time to check references. Previous landlords, employers,
financial references, credit and judgments are all vitally important.
If there are any questions do a thorough investigation. Drive by their
previous residence. A little work up front can save tremendous problems
- Make Sure You Get Estoppel Letters -
Get letters from tenants confirming the status of tenancy. Make sure
their version of the rental or lease agreement corresponds with the
- Don’t Spend Positive Cash Flow
- Most of successful investors have free and clear properties. Be sure
to re-invest your cash flow back into the property payment and speed up
the amortization schedule. This decreases your debt load and increases
your equity which builds your net worth.