On Father's Day, 15 Tips From Rich Dad For Real Estate Investors

American real estate tycoon Donald Trump is widely known as a self-made man. But, he was born to Fred Trump, a wealthy New York City real estate tycoon who insisted that his children work extremely hard. When they were children, Fred Trump took them around on Saturdays, while he inspected boiler rooms and spiffed up lobbies. His daughter Maryanne Trump Barry, now a senior judge in the United States Court of Appeals for the Third Circuit, once said that when she took a day off after weeks of hard labor, her father asked, ''But what will the other judges say?'' Geneticists would argue that genes matter far more, but Robert T Kiyosaki, who built the Rich Dad brand and co-authored two books with Donald Trump, thinks that Trump's father had an important role in his success.

On Father's Day, investors who buy real estate in India might benefit from these 15 tips from Rich Dad's Advisors' book The ABCs of Real Estate Investing authored by Ken McElroy:

1. If your heart and mind is in it, researching about real estate assets is great fun. In modern times, this is easy. You can find information while driving around, in the media, on the internet, or whichever relevant source you are willing to look into. This is fun because you gain deeper and deeper insights that help you see the world with greater clarity.

2. The neighborhood in which you buy property matters than the property itself. An important factor while assessing a market is whether demand is greater than supply.

3. There are clear signs that tell you whether demand is greater than supply in a market. If the occupancy rates in a sub-market is high, this means that demand is great. But, if builders and owners offer many incentives to buyers and tenants, this means that demand is low. If such incentives are not common in a market, this means that demand is great.

4. For an investor, what matters the most is whether future supply is greater than future demand. Nothing influences the appreciation of the value of a piece of property as much as the difference between future demand and future supply.

5. If employment generation in a locality is high, demand is likely to rise. This is true of rental properties, retail businesses, restaurants and every other kind of real estate asset.

6. Population growth in an area depends on whether reputed companies are building offices in an area, whether there is diversity in employment, and whether there is a growing demand for products and services of existing companies.

7. To assess future demand, get realistic population projections from the government, private firms and the media. Many factors other than employment can raise the population in an area. New highways, highway extensions, sports stadiums, universities, and airports are factors that influence migration and demand.

8. Location matters, but this does not mean that geography alone matters. Is the property you would like to buy, located in an area where people would see it while driving by? Is there enough traffic in the locality? Does the area have a rare quality that makes it attractive to buyers? All these matter while buying property in India or elsewhere.

9. As you cannot verify every piece of property that you find interesting, use brokers to shortlist properties.

10. To develop expertise, think of everything in terms of real estate.

11. Reading everything you find relevant, like details on upcoming retail centers, re-zoning of land parcels, crime reports and the quality of academic institutions in a locality.

12. To evaluate property, find out the income it currently generates, and potential income. After verifying expenses, determine net operating income. (Net Operating Income=Income—Expenses). Then find out the capitalization rate and valuation. (Capitalization rate=Net Operating Income/Purchasing Price). Finally, calculate the loan payment and your profit.

13. You should meticulously review every document related to property, and walk through every apartment unit, paying attention to every detail.

14. When you buy property, you should have a clear idea of how you can improve it. From the information you gather, generate an operating plan and budget.

15. Ensure that the property complies with government standards and regulations. Make sure that it complies with fire codes and has received all permits and approvals. Find out whether it violates environmental norms or zoning regulations, and whether it encroaches on other properties.