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Establish the Investments Level of Liquidity - Lets say you need cash right away. The Investments Level of Liquidity will be measured by your ease or ability to quickly convert the investment into cash, with still maintaining your original level of principal. For example, a savings account is highly liquid. By contrast, one of the least liquid investments is real estate because of the unpredictability of the market value at the time you are ready to sell and the time it takes to sell the property. The greatest real estate fortunes have been lost by those who overextended themselves and didn't have enough liquidity to weather the natural ebbs and flows in the real estate market.

Research the Level of Marketability the Real Estate Investment will have - When it comes time to sell your real estate investment, will you have a buyer that will convert the investment into cash for you at a fair price. This is the measure of marketability Take the example of stocks, stocks can be sold anytime on a stock exchange at the market value. With real estate, not only will you need to deal with market conditions, there will be real costs to consider whenever you sell a property such as marketing fees, brokerage fees and taxes. Those looking to invest in Northern Virginia Homes for Sale should try to invest with a business plan and avoid the marketability risks associated with real estate speculation.

Establish the Investments Impact of Leverage - leverage is the use of borrowed funds to finance a portion of the purchase price of an investment. The ratio of borrowed funds to the total purchase price is known as the loan-to-value (or LTV) ratio. A high loan-to-value would result in high leverage, while a low loan-to-value would result in low leverage. Real estate investments can be more leveraged than most other types of investments. Sometimes, mortgage debt results in 'negative leverage'. In this case, you should avoid mortgage debt or sell the investment. Other times, mortgage debt results in 'positive leverage' and can enhance your rate of return on investment. When buying a home in Northern Virginia, you should avoid the trap of negative leverage while maximizing the benefits positive leverage.