Image by Getty Images via @daylife
Everybody has heard the old real estate saying that the three most important components are location, location and location. However, many intelligent real estate investors have also realized that this is not entirely correct. While location is of critical importance to making money through your real estate choices, you also have another concern to think about when you’re making your final decision on whether or not to buy a particular piece of the Earth.
Costs are also an extremely important facet of whether you are actually going to make good money on your property. When you keep your costs carefully in mind, you have a lot of options available to you. For one thing, when you understand that a particular facet of a property such as an easement or the plumbing system will need expensive repairs, you can often negotiate with the seller to lower your initial expense. While that might not sound like much, you can later use your reduced cost basis to lower the property tax value of your property.
Over time, your costs are going to contribute a lot to whether you make a fortune, or just take plenty of tax deductions on the properties you own. Since tax deductions mean you’re losing money, this is a serious problem. The good news is, you can overcome it with ease. All you have to do, besides obviously keeping a careful eye on the location of your property, is to keep your mind firmly planted on what your initial and recurring costs are going to be. Keep them under control, and you can make a serious fortune.
