1. Location - Do not jump in to buy a property just because the market is bearish. Consider the location of the property very carefully. The fact is that a property with a bad location will not fetch you a good price even when the market is bullish. If you are interested in buying property then make sure that the property is suitably located. It should be in the vicinity of shopping complexes, malls, hospitals, schools parks and should be easily accessible by road and mass transit systems. It may be true that a property will cost you relatively more if it is well located. Nevertheless, you will also be able to fetch a better price when the market picks up.
2. Long Term - Investing in real estate is a long-term proposition with credible returns over a period. Nevertheless, you have the assurance of your incomes steadily over a number of years provided you use a prudent and disciplined approach when you invest in property.
In a rush to make a quick profit, do not sell your property a year before buying. You may have a higher capital gains tax liability. A property that can fetch good rental income is a gold mine. Don't think of selling such a property. Lease it out instead. Always set aside a certain portion of the income for upkeep and maintenance. Do not flip properties. Many investors who flipped properties found themselves in the middle of a property market crash and were saddled with properties that they could not dispose off.3. Lease Option - Never rent a property with a lease option to buy. You should sell or rent it straight out. A lease option goes against the interests of both buyer and seller. The tenant will ask for discounts on the rent with the argument that these be adjusted against the down payment and closing costs. In all likelihood, the tenant will not buy the property at the end of the lease and the proprietor would have lost a lot of money in terms of rebates on the rent. If at all you wish to use the lease option, make sure that you ask upfront for a 20 or 30 % deposit from the buyer. The lease agreement should have a clause that prevents the tenant-buyer from defaulting on the purchase by allowing you to forfeit the deposit.
4. Local - Buy local, think local. Think in terms of investing in buying local property; at least at the beginning of your real estate investment career. Do not rush to buy property in another state or country, as you would not be so knowledgeable about the conditions. Investing in property in other states will increase your overheads in terms of commuting. Consider the fact that as a prospective landlord you will have to inspect the property to determine if there is any damage every month. You will also have to ensure that the property is not being misused in any way. For instance there may be more tenants living in the property than is permissible as per state and federal laws.
The overheads add up in case you invest in another state. It makes for better business sense for you to think local and buy local.
The Four "L's" of Real Estate Investing