With the strong market of recent years, many Americans are turning to real estate investment. Whether you have invested for years or are new to the practice, we’ll give you tips on being smart about your investments.
A recent Realty Times article explored the growing trend of real estate investment. According to the 2005 National Association of Realtors Profile of Second-home Buyers, investors accounted for 23 percent of all home sales last year. Although investing may seem like a sure way to make money, be aware that a market downturn could spell seriously bad luck. To avoid regretting your investment, here are some tips to help you stay smart in real estate.
- A primary home is most important. Buying your own home gives you a place to live and teaches you the cost of home ownership, financing and market conditions. You will also learn about property maintenance and build your own network of professionals who can prove to be invaluable when investing. Finally, your first home could later turn into your first investment property!
- More knowledge is better. Being a savvy investor takes more than just buying up promising properties. Having a good knowledge base will go a lot longer than a “sixth sense” for good deals. The Internet, books by reliable authors, investment groups and college courses are all good resources to learning the best investment practices. You can also tap into other successful real estate investors or real estate agents for information. Make sure you use more than one resource so you can evaluate the viability of the information you gather.
- Professional help may be necessary. Although you may not think you need help, a trustworthy, honest professional may be the partner you need. Realtors can be especially helpful if you are new to investing, and management companies may take the pain out of property management. For instance, managing a rental property takes a lot of time, and you will need to be prepared to make repairs, resolve issues and advertise for renters if you are taking on the task yourself. In the long run, a management company may be just what you need. Use the referrals of friends, family and associates to find reliable, honest professionals to help you.
- Know the market inside and out. Before you invest, investigate the local market thoroughly. There is no universal real estate “bubble.” Each market is different, and experiences different fluctuations and trends. One market may be good for rental income but not appreciation, while another market may be excellent for appreciation but poor for rental income. There are endless variables, and it is important for you to know exactly what you’re getting into. Remember that one area is never the same as another area.