While it's nice to invest less for the same property, the downside is not limited to the higher interest rate on the second mortgage loan. Since the buyer doesn't meet the standard 20 percent minimum, lenders almost always require PMI (private mortgage insurance). Fees are usually hefty.

Though it's theoretically possible to have the lender remove the PMI requirement after enough payments have been made it rarely happens. In theory, once the loan(s) have been paid down so that the LTV (loan-to-value ratio) is at 80 percent — usually by a combination of paying down the second mortgage and appreciation of the value of the property — the lender will be willing to consider removing the PMI cost from monthly payments. Most often, before that happens, the loan is refinanced or the property sold.

The ambitious can find other sources of financing. When considering property in a new development, such as a planned community or new housing tract, manufacturers will often be willing to fund a home loan for early buyers. Such loans are frequently available at only 5 percent of the purchase price.

For the really daring it's possible to 'buy' a property, then sell it, without ever owning it — at least not for long. It's possible to buy a property, establish a contract, and then sell the contract for anywhere from $500-$5,000 without ever taking possession or even being on the title. Profits are usually smaller, but obtained quicker, though deals require excellent credit.

'Sub2' deals are another form of creative financing. The typical 'subject-to' deal involves having a seller deed you the property while leaving the existing mortgage in place. You never legally assume the loan, but simply start making the payments. There are lots of variations on this new way of buying property. Not recommended for the beginner.

You can finance a property investment by forming a limited partnership. Arrangements cover the spectrum. In some, each partner puts up some percentage of the cost, usually half and half, but sometimes profit is apportioned according the original percent invested. In some cases, it's possible for one partner to invest money, while the other(s) performs services —— such as repairs on a 'fixer-upper'. The deals are as varied as people.

For those with low incomes, or military service, or other special circumstances various government loan programs are available — though they're usually limited to individuals intending to occupy the property.

It's even possible to fund a property purchase with credit cards, but there are several obvious downsides to this method. Apart from the substantially higher interest rates, lenders look at all outstanding debt when judging whether to grant a loan on the remaining balance. Taking out a cash advance to cover a shortfall between the needed 5-20 percent down will usually get you turned down.

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Friends, family, and other sources of money are usually viewed the same way, unless you can prove to the bank that the money is a gift and not just a loan. Mortgage lenders have seen it all! Don't try to fool them.

Investors have a hard life. Rising insurance rates, legal liability, security concerns and increasing interest rates may not be actually conspiring to give them early heart attacks, but it can seem that way. Managing risk is in large part about how to lower uncertainty by dealing appropriately with those and other stress factors.

When building new structures, manage risk by reviewing trade area demand — by demographic and daytime population for commercial structures, for example. Look also at site characteristics and examine local competition and contrast with regional differences. Take some time to find out about upcoming environmental regulations.

Be sure to set aside the needed amount for insurance, and err on the side of too much insurance rather than too little, if minimizing risk is an important goal.

Go into a deal with the maximum available capital by not spreading your resources too thin. Keep borrowing low and avoid ARMs (Adjustable Rate Mortgages) unless they're longer than three years and you expect to sell well within that period. ARMs are inherently higher risk, and the 'interest only' type even more so. Rates tend to rise more quickly than they fall, over the long term.

If you have an ARM and rising monthly payments occur, due to interest rate increases, while the market price is dropping (as may soon be the case), consider selling. Even stocks have to be sold sometimes during a period of declining prices. Capital preservation is important for long term investing, and part of that involves keeping liquid during a 'market correction'.

Some lenders allow borrowing more than 100% of the value of the property. Unless you can use the extra cash in a way that more than compensates for interest and other charges, that's burdensome debt.

Take the time to seek out trustworthy and competent people — don't settle for an uncooperative or arrogant Title company or an unreliable contractor because you're busy. Think in terms of long term relationships. Otherwise, the long term will involve counting financial losses.

Risk can be spread by forming partnerships and, in come cases, by incorporation. Incorporation can allow you to separate personal from business assets, protecting you in case of severe decline. But there are limits — you don't automatically get to walk away from debts by being incorporated. Partnerships though, if you can find reliable and compatible individuals with whom you'll feel comfortable over the long haul, can strengthen your position.

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Partners can help fill in gaps in your knowledge and experience, provide additional capital and someone to bounce ideas off of. But choose carefully. Differences of outlook can lead to stagnation when it comes time to take action. Remember, risk can never be reduced to zero.

According to a recent study in The Economist, residential property investment in developed countries amounted to $48 trillion, while commercial real estate investment (CREI) was 'only' $14 trillion. Though the number may be smaller, CREI is much more complex.

It may be a multi-dwelling apartment complex used as residences by others, but to the investor it's a commercial enterprise. As often, the commercial property is a multi-tenant commercial building on land zoned for that purpose. That introduces different considerations for valuing, financing, leasing, maintaining and a host of other tasks.

The commercial investor has, usually, to invest a larger amount — requiring superior credit and incurring greater risk — and to estimate capitalization rate (cap rate) and Gross Rent Multiplier (GRM).

The cap rate is calculated by dividing a property's annual net operating income by its purchase price. Historically, good investments had a 10% cap rate, but the last few years has seen that decline to 8% corresponding to a greater risk and lower expected return. The GRM is arrived at by dividing the purchase price by the property's monthly gross operating income. These, along with consideration of assessed vs appraised value, and comparables, total income and replacement costs form the hard-fact base for estimating the worth of a deal.

Commercial properties are at greater risk of unpredictable changes in general economic conditions. A building that enjoyed a 100% occupancy rate can quickly become only half full because of factors far outside the local market. Events in Asia or elsewhere around the globe can turn business conditions for some upside down overnight, whether the tenants are located in California or Barcelona.

Commercial property investment requires increased knowledge of law, maintenance and finance. Zoning, leasing regulations, and other legal issues are more complex than for residential property. Where properties are rented, rather than just bought and sold — often the case with CREI — owners usually have to consider large electrical, air-conditioning and security systems, along with fire suppression, telephone and Internet facilities. Even plumbing is more complicated in commercial structures. Mortgages are more complicated and insurance is more costly.

The exception is the triple-net lease. In this arrangement the tenant is responsible for all the expense and arrangements for maintenance and repair as well as insurance.

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But not to be gloomy, there are great potential rewards from CREI. The risks are greater, but often the return is as well — especially during good economic times. And the satisfaction of being part of sustaining and helping grow the dreams of other entrepreneurs is a great bonus for the commercial real estate investor.

And, after all, sometimes, more complicated means more interesting.

Now, with a brief search and a few mouse clicks, you can find more properties than you could ever turn over and more information about them than most of the previous owners know. With the arrival of high-bandwidth connections you can quickly access and view photos, 360-degree views of the interior and exterior, as well as the surrounding area and streaming video in close-up and overview.

Title searches, back taxes owed, legal encumbrances, previous ownership history and other pieces of valuable data are easy to obtain along with the current and past selling price. In some cases, you can get past inspection reports and records of repairs made.

And most of that information is available for nothing more than the cost of your time to find and review it.

Of course, mortgage financing has taken on entire new possibilities with the growth of the sites devoted to that subject. Traditional lenders have taken advantage of the technology, but there are also dozens of mortgage lending sites that have no brick and morter presence at all.

Even out-of-state and foreign markets have been opened up across the globe by the growth of the world wide web of property information. A Spanish investor can find a villa in Italy or France, while an American can easily locate wineries for sale in France or a Bed and Breakfast in England. Properties are available for purchase as a pure investment, a second home — which can be rented for part of the year using Internet sites, or even full-time rental.

Selling, too, has been made easier by utilizing any of the hundreds of sites devoted to the subject. For Sale By Owner is now much more feasible and quicker thanks to sites that advertise property — many of which provide low-cost additional services for helping you make that sale. That's an average 6% increase — the average cost of an agent's fee — in profit all by itself. Six percent of $200,000, for example, is $12,000. Subtracting off $100 for a three month listing still leaves a very healthy reduction in cost.

Though it's always a good idea to see any prospective property first hand, much time can be saved by gathering useful information before a site visit. And with the ease with which appraisers, contractors, title companies and realtors can be found — and more so with the growth of Local Search by the major search engine vendors — buying and selling has gotten even easier.

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It won't be long before transactions can be carried out entirely electronically without leaving your home office. Many states and countries already allow electronic signatures on documents, eliminating the need for mail or faxing of paperwork. Now if they could just invent something to legally produce the investment capital...

Buying property is expensive under the best conditions. Even if you don't outlay a huge wad of cash initially, you're signing up for a substantial financial commitment. For those intending to occupy the property, at least for a while, there are additional expenses — moving, storage possibly, and often tax consequences.

So the first step after agreeing on a deal is to get favorable financing. Bzzz! Wrong answer. Get favorable financing BEFORE you agree on a price and decide who pays for what. Assuming you intend to finance, and if you aren't you don't need to read this, shop around for lenders.

Banks, mortgage companies, on-line financiers, and others all compete for your business. Make them earn it by looking for the lowest rate you can obtain for your credit rating. Negotiate fees required and the dozens of charges that lenders tack onto the loan — sometimes before even agreeing to fund it. Don't pay the lender a large 'application fee', unless you have seriously bad credit and have no other option.

Repeat the process with everyone else involved in the deal. Title companies often have high fees, but you're not required to use the one an agent or the lender recommend. You're free to use whomever you wish. Watch out for 'rush delivery charges' - often $50 or more to have a package of a dozen papers sent across town — and similar fees. You're not required to give anyone free rein when they're spending your money.

Do the same thing with whomever the lender and title company recommend for insurance. You're not required to use the one they like, but they will usually try to bully you into accepting it because they're busy and it's easier for them. Remember, though, you are paying them. They're looking out for their interests — you have the right to do the same.

When you talk to the lender, ask what options are available with your credit rating. You can often obtain 5% down, and sometimes even no-down, loans — but beware of the high interest rate that sometimes accompanies them.

Other financing options can be found by those willing to wait and to shop around. Some sellers and lenders will allow you to assume an existing loan. It's also possible to negotiate a deal in which the seller agrees to pay a larger percentage of the closing costs. In rare cases, they will pay all the closing costs, but usually by rolling it into your loan.

The last few years have been largely a seller's market, so this has been less common. But the situation is changing. Even in a seller's market, though, not everyone is in a position to be rigid. New employment opportunities, layoffs, unexpected expenses, a death in the family, and a dozen other reasons can give a seller a big incentive to move quickly. That translates to a willingness to negotiate a fast deal for the best price they can get.

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It's your money. Keep as much of it as you can by shopping around and not letting anyone rush you into taking a bad deal.

Most investments can be bought or sold within minutes at the market price. Buying or selling real estate takes months. That difference introduces interesting wrinkles in timing when to buy or sell. Like other investments, selling at a high point, with the intention of buying back in at a lower price, is one way to make a profit. Here again, the difference in time required to complete a transaction makes life more interesting.

It's usually easy to sell a stock, wait a day or a month and buy that same stock at a lower price. When that stock continues to rise, there are often others that have declined but can now be predicted to rise again. The real estate market rarely offers those kinds of opportunities.

The other difference is that companies differ but most stocks are alike. Real property is always unique.

Selling requires one to either acquire a new residence, wait for a new opportunity to enter view, or buy back in at a higher price, hoping for yet greater increases. Along the way the costs of getting in and out are substantially higher than a few dollars for a stock trade.

So, what to do?

One clue is provided by the historical fact that many have and continue to make good money in real estate — even though the market has gone through several cycles over the last few decades. That last piece of information gives another clue — think long term.

There are several strategies for improving your timing options. One is to acquire property at bargain prices, either through seeking out foreclosures, or looking at property requiring substantial repair.

If you have patience, it's possible to find foreclosures that sell for anywhere from 25% to 35% under current market for that area. Read local newspapers and websites for Notice of Default listings and upcoming auctions.

It's also possible to find areas where sellers tend to be leaving, but there is some likelihood of a turnaround. The latter is possible — previously depressed neighborhoods in Manhattan, such as the Lower East Side, now sell at a premium. Areas in other major urban centers have experienced similar turnarounds. Again, you will need to research and think long term. Look for political activity of urban renewal efforts.

If you're good with tools or know someone who works inexpensively it's possible to acquire property needing substantial repair. Fixing a leaking roof, and repairing water damage through installing new drywall and painting, can increase the sale price of a home by 10% or more.

One key to making any of these strategies, and many others, feasible is to have as much working capital available as possible. That doesn't necessarily mean having a huge savings account. You need to be liquid and have access to money, not necessarily in your own account. Keep liquid, keep your credit rating high, and establish a good working relationship with a lender in order to have rapid access to financing.

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Opportunities for profit, even in a market that's leveling off from historically high rates of increase, are still around. But only for those who are willing to exercise patience, do tons of research, and have the ability to walk away from any deal when illusions meet reality.

'Flipping', in real estate investing lingo, is nothing more than buying a property and selling it again quickly, hopefully for a healthy profit. It's not illegal, it isn't even unethical — it's just business, and that can be done either way.

To flip a property, you first have to find one that's flippable. That usually involves finding either a 'fixer-upper' and 'fixing-upping' quickly for a rapid sale, or finding a buyer that's eager to sell at a bargain price.

Talk to friends and relatives, business contacts, bankers, real estate professionals, or anyone else who can give you a lead to a bargain. Sometimes, simple driving around the right areas will allow you to spot one. Look for those 'For Sale By Owner' signs or knock on doors.

Alternatively, public records sometimes contain references to 'fire sales', and — if you dig deep enough — occasionally to property owners finding it difficult to make their mortgage payments. When you find one and they agree to sell, you're getting something you want — a property that might turn a profit. They're getting something they want — relief from an unsustainable debt burden. Nothing unethical about that.

Some deals are possible that don't even require you to put your name on the title. You can 'double-escrow' a buyer who wants to remain living at the property. Double escrow involves taking a very long escrow — longer than say 90 days — and reselling the property during the escrow so that both deals close escrow on the same date. In a rapidly rising market, the buyer can then take advantage of the increase in the sale value of the property.

Always have your financing in place, if needed, and be prepared to move quickly.

You can 'flip' by entering an agreement to purchase a property, then selling the contract to another investor before close of escrow. You pocket anywhere from $500 to $5000 and don't even need to find financing.

To be successful at flipping you need to master a steep learning curve and look honestly within.

You need to learn how to spot a salable property and to learn to judge buyers. You need to learn a little about property repair, which usually involves doing some yourself. That means finding out about plumbing, carpentry, and other skills that usually aren't the first love of investors.

You need to have an active personality — flipping involves dealing with lots of details in a short span of time. It also means having or developing a high tolerance for risk. Stressed buyers aren't usually the most calm, reasonable people to strike deals with. They often have poor credit and can back out on a deal at the last minute.

You need to hone negotiation skills and develop relationships with contractors and lenders, especially the kind that can be relied on to move quickly when you need them to. You should have a trustworthy accountant and a responsive attorney, unless you already have these skills.

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You need to learn a fair amount about contract and real estate law, and study the tax consequences of buying and selling properties within a short time frame.

Whew! And you thought your business was a tough racket.

It's often been claimed that Real Estate investing is one of the easiest ways to make money. In one way, that's true. With a modest financial investment and a fair amount of sweat equity, a property can be bought and sold for a healthy profit and the future still looks pretty good.

But easier is not the same thing as easy.

So, to simplify the process, here are some things to consider when getting started.

Before investing money, invest some time. Think about what financial goals you want to achieve and over what time frame. Be realistic. Easy to say, hard to do — especially when home prices have been rising for several years and still are. But like any market, real estate values may go down, and when they do it's usually a sharp, steep drop.

Once you've decided how much of a time and money commitment you want to make, write it down. Make a one year to five year business plan in as much detail as you can, and then review it after six months and again after two years.

Part of that plan should be an estimate of how much capital you've got to invest, which will differ depending on whether or not you plan to use your primary residence as your first investment. Just as one example, if you have less than $10,000 to start with you are definitely looking at either using your own home or buying a 'fixer-upper' as your first venture.

It's true you can get into a secondary property with no money down and just a couple of thousand in closing costs if you have good credit. But the market would then have to rise quickly, and you would have to sell right away.

That's risky and has serious tax and legal consequences. The alternative would be to take on high monthly payments and maybe additional expenditures on repairs. Again, risky and potentially expensive. You stand a high chance to lose more than your initial investment, because even though you only put in a small amount, you're still legally bound for the entire package.

Unwise move for the newbie.

Another part of that plan should state how much risk you're willing to take. Be especially honest and consider your personality type. Some investors favor capital preservation, others lean toward maximum return in the shortest time. People differ in their tolerance for risk. Be sure you know yours.

You'll need to consider your available time commitment, establish a relationship with a lender, learn about the market, contracts, insurance, legal rights and requirements, tax consequences, and many other aspects of real estate investing.

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If you still want to take the plunge — bravo! You can make a healthy additional income, or even a full time living, in what remains one of the soundest investments available. And, apart from what can be serious money — it's a great adventure!

You want the most profit you can get for that property you sweat blood to buy. Is there anyway to improve your chances, without investing a lot more? Fortunately, there is.

Offer to mow the lawns of those to the left and right, or take their trash to the dump as an incentive. A small cash offer on successful sale will also motivate cooperation.

At the same time, show them you're getting your own house in order. Mow the lawn carefully and repair any bare spots. Trim the edges. And invest in a few dozen inexpensive flowers and plants if the season permits it. The exterior is always what is seen first and first impressions linger.

Since a home inspection will almost always be done prior to a conclusive bargain being struck, take the opportunity to make those inexpensive plumbing repairs BEFORE showing the house. Some of the more expensive ones might wait, to be used as a bargaining chip. But fix that leaky sprinkler head that sprays the sidewalk and replace that dripping bathroom faucet.

Replacing carpeting throughout an entire house, or even one room, can be expensive. But getting it cleaned costs very little, typically. And repair any small damage or try to cover it with a piece of furniture. Eventually, you'll have to show every flaw when you have a concrete deal. But it needn't be the first thing they see. Replace those old welcome mats and small entrance rugs with new ones.

New screens are low priced and can make the exterior look fresh and new. To save even more, you can remake the screens with mesh and rubber kits, provided the frames are still in good shape.

Replace any cracked or broken windows. You'll usually have to do this anyway as part of closing the deal. Of course, all the windows should be cleaned thoroughly to give that shiny new feel. Even a brand new house that's dirty will fetch a lower price.

If you have air conditioning and heating ducts, replacing defective or worn conduits can get very costly. But many parts in a house that are not seen use silvered duct tape anyway, so patch any holes carefully to give a professional look. Replace old filters to give the appliances a newer look and the air a fresher smell.

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A bit of spackle and a coat of paint on those rooms that have seen accidents needn't cost a lot and don't take a lot of effort. Be sure the work is done carefully, though, or it can come out looking worse than before you started. A buyer that sees that you've made efforts to keep the property up will be more inclined to offer a better price. Think of the last time you bought a car. Didn't you favor the one that was well maintained? You were probably willing to pay a little extra to get that one. They will be too.

There is no more Byzantine human invention than the complex tax codes, and among the most complicated are the laws surrounding real estate investing. So, what follows is NOT to be considered legal advice — consult your attorney or tax accountant before making any decisions.

Many investors still believe they can purchase a residential home, not take up residence, make repairs and then sell for substantial profit. And that's often true. But profits can be lowered by neglecting current tax law. The rule they're mis-remembering applied only to property used as a personal residence and, in the U.S., is no longer law.

In 1997 that rule was replaced by one that allows for tax-free sale of a personal property, occupied for two years or more. Investment income, whether from stock sales or real estate is considered capital gain. If the asset was held for a year or less it's a short-term gain, taxed at ordinary income tax rates — sometimes as high as 35 percent. Hold the asset more than a year and any sales is now a long term capital gain, taxed (usually) at 15 percent. One day more or less could make a 20 percent difference.

If you keep the property for 730 days, not necessarily sequential, as a residence and you can pay no tax at all — provided the money is reinvested in a home of equal or greater value. (There is a one time exemption.)

For the investor not looking to occupy the property, there is an alternative, in the U.S. — the 1031 exchange.

As long as you trade an investment or business property for another of "like kind", you can defer any tax owed. "Like kind" is defined somewhat loosely. You can swap undeveloped land for developed land, a residential rental home for commercial property, etc. The only restriction is the exchanged property has to be an income producing asset, not a personal one.

You have 45 days to identify up to three replacement properties and must close within 180 days. You must also find a neutral intermediary — a "facilitator or accommodator" — to hold funds and keep records.

Keep in mind this option is not tax avoidance, merely tax deferral and can't be used in conjunction with your personal residence. See your tax accountant or attorney before taking advantage of this.

For married couples, tax law changes allow a profit of up to $500,000 on the sale of the personal residence, $250,000 for singles, with no tax penalty.

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Mortgage interest deductions continue to be one of the best write offs, with up to $1 million loans qualifying, as well as any points or loan origination fees. Always keep accurate records and consult with professionals before making any investment decisions. This is especially true for those lucky enough to have inherited property, or those involved in estate sales and trusts. Their fees will be more than paid for by avoiding penalties and unexpected taxes.

Buy low, sell high. Anyone in any market aims for that, but few succeed. The only reasonable conclusion is it's easier said than done. So, to be part of that group of 'we happy few', consider some of these ways to maximize your return.

After the purchase, carry out any repairs needed yourself — to the extent you can do professional level work. Be thrifty, but not foolish. Amateur repairs lead to larger costs down the line. Shop around for low-cost quality roofing materials and superior carpet deals. When you can't do the work yourself, seek out skilled handymen from small outfits. Companies whose prices include overhead for bonding of employees eat into your profits.

Shop around for low-cost loans with lesser known lenders. Major banks and mortgage companies tend to have higher fees and less than competitive rates. Never pay anyone an 'application fee'. Perform the same exercise with respect to title and insurance. You're not required to use anyone the lender recommends.

Once you've selected them, don't passively accept unnecessary fees with ridiculous prices. In today's world it's absurd to pay $50 to deliver a few dozen papers across town, but tacking on charges like that is common practice. Take your time looking for property, lenders, title companies, insurance brokers, agents, etc. Shop as carefully as you would for a new car — no more so, you're investing much more.

Educate yourself about real estate law and basic accounting. Professionals in those areas charge large fees — and earn them. Good advice costs heavily for a good reason. These professionals can save you thousands by avoiding costly mistakes. But you can perform many of those services yourself if you're willing to study. You don't need a law or accounting degree, just an active mind and a lot of patience for detail.

When you've found an attractive property, negotiate firmly but in good faith. Be willing to state clearly what you want and prepare to compromise. Individuals who feel they've been burned often find ways to sabotage your profits in ways you discover only later.

When you're on the selling side, perform the same thorough shopping process and negotiate agent percentages, closing costs, and other high-ticket items.

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Prepare the property for sale at the maximum price by investing in a few flowers and having the property thoroughly cleaned. Leave the lights on even during the day. Put on some "mood music" at a low volume; put out some attractive flyers with photos and little snacks for visitors. Market your property heavily to get a large pool of interested buyers. Competitive bidding always benefits the seller. Be willing to take your time during the process. He who is most eager, makes less.

Real Estate is a complicated business. Every facet is controlled, in most countries, by numerous legal restrictions and requirements and there are many people involved in any deal, some with vested and competing interests. But you can also make a lot of money and, in some ways, a lot easier than in many other businesses.

1.How much capital do you have?

2.What's your tolerance for risk?

Capital and risk are inseparable partners. A person with five million in the bank can absorb a risk of five hundred thousand without serious, though maybe painful, consequences. Someone who is putting up their hard earned five thousand, hoping to turn it into fifty, is in a different situation. I'm not suggesting the one with five should stay home and watch television. Taking risks is admirable and exciting. But you should estimate realistically how much actual money you can put into an investment. The mirror half of that is to be honest with yourself and think about how much risk you can live with emotionally. Some people are natural adventurers, others prefer a cautious approach.

3. What are your long-term financial goals?

Some individuals are interested in capital preservation, others want maximum return in the shortest period. Each carries a level of risk, and also an implied time commitment. Each demands a particular level of investment of time and money. If you're looking for a ten percent profit on your investment in a matter of weeks, real estate isn't for you. If you're after high percentage gains, that's possible but risky and usually requires a year or more commitment. During that year, your investment is not liquid apart from the ability to borrow against it. Along with having your funds tied up for other potential uses, property values can change dramatically in a short time frame. The last few years have been steadily up in most areas, but with changes in interest rates, that can (and probably will) change.

4.What kind of person are you?

Real estate investment, unless you just enjoy losing money and enduring stress, requires a tolerance for risk, a commitment of time and effort, and an interest in details — especially legal details. Beyond all that, the more basic requirement is an interest and aptitude for learning. Market study, advertising, contracts, construction, property law, even a fair amount of psychology, all form a part of real estate investing. You don't have to become an expert in these, and other, areas before making a move. But if you don't enjoy learning about these and the host of other subjects that are part of the business — well, come on in because the sharks love fresh meat.

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If you still haven't been scared away — bravo! You stand to make a lot of money in one of the oldest businesses and biggest adventures still around in the modern world.

No one profits from their own ignorance. Thinking ahead is your best guarantee when considering whether to rent a property into the future or to sell for a fixed profit today. If you want to keep a property in the hope of taking advantage of tax breaks and capital appreciation, but hope to offset the expense, consider both those upsides and some potential downsides to renting.

Before you get to that stage, plan ahead.

Consider the tax consequences of keeping the property versus selling. Make a guess, based on studying the current market, interest rates, and past trends, about where prices are going. Once you've decided to rent, learn your legal rights and obligations.

All prospective tenants should fill out an application that supplies you with information allowing you to perform a thorough background check. Take that info and actually do one. Check credit history — noting especially any history of late payments. Verify employment and talk to previous landlords.

Write a fair contract that spells out as clearly as possible respective rights and responsibilities. Write it in plain language, so one has any valid claim to failure to understand a clause. Make sure it's fair to both parties. Spell out the amount of deposit required, how much notice is required for landlord inspections, who is responsible for what kinds of maintenance, and so forth.

Carry out your part of the bargain by adhering to the agreement, then go a step beyond what's required. Respond quickly to reasonable requests for repairs. Tenants have usually only one weapon short of legal action — failure to pay rent. Don't provide any justification for them taking that step. Both parties benefit by fair and responsible behavior.

Make sure you have adequate insurance for serious repairs (roof, carpets, air conditioning systems, etc), or can carry out these repairs yourself.

Keep accurate records of payment dates and amounts. When a payment is late, don't delay finding out the reason. An occasional delay of a few days is not generally a reason to get excited — everyone has unexpected expenses from time to time. But a tenant who is perpetually late is a cause for concern.

Call and discuss the issue calmly and professionally. Make clear that, in the contract, you're entitled to levy a late fee on late payments. Use that as a bargaining chip to encourage on-time payments. Make sure you know the law or have good legal advice available before it's required.

Check with the neighbors from time to time, without displaying hostile suspicion, and find out whether the tenant is acting like a good neighbor. They don't have to be a friend to all, but if they are making life miserable for those around — leaving trash around, damaging property, excessive noise, etc — the value of your property can be affected. Neighbors can provide uncomfortable information for future tenants and prospective buyers.

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If legal action is required, try to opt for arbitration. Issues get settled quicker, cheaper, and usually all parties are happier at the outcome. Do your homework and keep up the property before and during renting. That provides the best protection of your investment you can muster. That way whether renting becomes a nightmare or a beneficial investment strategy is up to you.

In a market that has seen double-digit price increases for two years or more, selling a home was easy. Offer the property for sale at or slightly above market value and watch the bids roll in — sometimes within days.

Even in a tightening property market, a seller has options. If the property is also a primary residence and there's no pressing need to move, one can just sit tight and wait for the next upswing. You may have to wait one year or five, but come they always do.

Whether you're waiting three months or three years, there are several viable strategies for upping the odds of getting acceptable offers.

Almost any property can be improved, usually at modest cost — sometimes with sweat equity alone. Get out your tools, or find a low cost contractor and fix those broken roof tiles. Even if the damage doesn't affect the integrity of the roof, the improvement in appearance is worth it.

Replace those worn throw rugs near entrances to give the house a new look. Paint that room that's seen wear or too much smoke tarnishing. Get the carpet professionally cleaned and keep the inside and out looking immaculate. Buyers always pay more when a property owner shows they've maintained it well.

Other low cost, but profit enhancing, items include inexpensive lawn repairs and a few dozen garden plants and flowers. Remember, the outside of the property is always what visitors see first.

Once you've made everything look and function as well as possible within your modest budget, encourage the neighbors to do the same. Most properties are near others. The appearance of a neighborhood — children's toys in the front lawn, tired looking screens, shaggy hedges, etc — reflect on your property too. Whether future homeowner or investor looking to sell to one, others will be interested in the effects on the property you're offering.

Now that everything possible has been done to make the property and it's surroundings optimal, check to ensure the price is reasonable. Market prices change fast, but they also vary considerably within a local area. A 1,500 square foot one-story dwelling is generally going to go for less than a 2,000 square foot two-story.

Prices vary by total square footage of property, year built, and other factors. Look on-line for comparable properties to get an estimate, then speak to a professional to get "the comps" — the estimate by appraisers and others of the actual prices of comparable properties.

Does the property back up onto a noisy thoroughfare? Consider double-paned windows so visitors inside the house hear nothing but the soft music you play while they're looking.

Has the property been on the market for several months, but not sold? Take it off for awhile, then re-check the price before re-listing. Most people don't want something that others have rejected, even if they can't find anything specifically wrong.

Have you spread the word far and wide? Market heavily to the local area, but spread the word on-line and in other cities that you have an attractive and well-maintained property. People re-locate and it's still the case that advertising to outsiders is less effective than to those who can visit with a short drive or train ride. Use new technology to give you an edge.

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Be the one to make that extra effort and you'll get a fair price.

No doubt, negotiating an agreement you'll later be happy about is the toughest part of any investment. It's a rare investor who consistently says afterwards that they got everything they wanted at the price they wanted to pay. But like any skill, negotiating can be learned.

Of course, most sellers will not volunteer answers to these questions when asked point blank. One technique is to draw them out slowly, revealing personal information about one's own status.

Apart from knowing the seller's situation and the true condition of the house, which you will find out from a professional inspection, you need to know the surrounding market. How much are comparable properties selling for? 'Comps' are available on-line or from a broker.

Talk to the neighbors of those homes that sold recently. Find out if there were repairmen in-and-out prior to the sale. That will help you sharpen the comparison. When you're looking around, note the condition of other homes in the area and try to judge the trend. A neighborhood can deteriorate or improve; that affects future property prices.

Once you know the seller and the market, make sure you have all your other tools in place before even beginning the negotiation proper. Have financing already assured and in-place — don't just get pre-qualified, but pre-approved. Cash in hand is much more persuasive than promises.

When you make an offer, suggest a figure that is NOT a round figure, like $253,300. In large transactions individuals have a tendency to think in terms of percentages. The percentage difference between $253,300 and $253,000 is small — but $300 is still $300. It also puts a seller temporarily off guard. They'll wonder what you might know that they don't.

Make a fair offer, consistent with the middle range of the market. Too low an offer leaves you with an unmotivated seller, too high gives you nowhere to bargain. Make sure you have plenty of bargaining chips to start. In any deal everything is negotiable. The price is only one item.

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Negotiate percentage of closing costs covered, and which items — insurance, realtor fees, title costs, repair expenses, and so on. But be realistic. No one gets everything they ask for up front. Make sure you have adequate legal and accounting advice, if you don't have these skills yourself. Review any written offer with them. Be willing to walk away from any deal that doesn't meet your criteria and goals. Be willing to take your time finding the right property and negotiating the price and conditions you want.