Real Estate Assets
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Investment Real Estate Wealth
ALL ABOUT REAL ESTATE INVESTMENT STRATEGIES
Relying on Experts Real estate as an investment may well be your key to financial security. However, one formula for success in today's world is to surround yourself with "experts". The real estate investment field abounds with experts; lawyers, accountants, brokers, appraisers and the list ...goes on. Though experts in there respective fields, they are likely to have little knowledge in the areas of in-depth analysis and financial structuring. Real estate investment decisions involve large amounts of money, and many risks. The decisions are often agonizing, so it's tempting to let someone else do the digging for information and to rely not only on their knowledge, but their judgement to make decisions for you. The prudent course is neither total reliance on the experts nor on total independence from them. Continued below
How many times have you heard the expression, "Taxes? "Oh my accountant handles all of that." An accountant or tax advisor would have greater knowledge of an investors overall tax status than anyone else, and should certainly review all investment real estate proposals. However, while the tax advisor is a necessary part of the investment team, they should not be expected to have the required knowledge in related real estate fields to evaluate, negotiate, and structure the investment. How about the expression, "Investments? "My attorney handles all of my investments." An attorney is also a vital part of an investor's investment advisory team and should review all real estate investment proposals. Again however, they may not have the real estate expertise to capitalize on alternative structuring opportunities. Then there's the expression, "He ought to know, he owns one." That person's advice is likely to be the worst possible advice. They might be taking a beating with their real estate investment and not even be aware of it. Simply ask that investor what their after-tax return is. . .or what their accumulation of wealth position will be over a given holding period. Unless you're talking with an astute investor, they won't even be aware they can analyze their investments at that depth. Well then... where does the planning strategy begin? As previously stated, it could be a costly mistake to rely totally on the knowledge and judgement of any one advisor. Many so called "expert" recommendations are the result of out dated rule of thumb assumptions, leaving much to be desired in the way of expertise. Often the investor, enamored with the professional status of the advisor, is hesitant to ask for in-depth explanations. As for judgement, it should be the investors judgement that influences the final decision. However in order to exercise good judgement an investor must be well informed, and be a part of the process working along with their advisor in analyzing the investment. Don't tell me what to do...show me how and why, in the form of a written "Investment Value Analysis." Your primary goal should be to seek out a specialist that will teach you to understand the reasons for your investment decisions one highly skilled in the areas of investment analysis, tax planning and financial structuring. A certified specialist, a CCIM, who will work with you as well as for you, and recommend cost effective user friendly software analysis programs to assist you with your analysis. About the
author: Stewart L. Mac Donald, CCIM, is President of
Real Estate Assets, Inc., a consulting services company
focused on maximizing wealth through Asset Management in
the real estate portfolio. Mr. Mac Donald has counseled on and
has been an active participant in a wide range of investment
real estate projects. He has written and presented seminars on
"Strategic Planning in the Investment Real Estate
Portfolio" before bar associations, financial planning and
investment groups. | |
