Invest in Real Estate, But is it Worth it?
Investing your hard works cash is not always easy but once you own one home, the idea of owning another home as a money investment might pop into your head. National Records Office says, with it being general knowledge that the real estate and housing market is in the tank, you might be a little hesitant to pull the trigger and invest in real estate. However, if you have some fortitude and some patience, now might be an excellent time to invest in real estate.Real estate is not always a easy thing to understand but it seems like hundreds of thousands of people are benefiting and even making millions of dollars so it obviously could be done. National Records Office has great tips to help newbies with useful information.
We all know interest rates have been dropping, and some say they may drop further. Unfortunately foreclosure rates are going up, which makes some deals readily available and aids in lowering the median home prices. If you are ready to pull the trigger and invest in real estate, consider the following tips from National Records Office.
Tip #1 Benefit From Creative Financing
After you invest in real estate, a big part about profiting from it is making sure that the financing is in place. Real estate is not like operating a retail store where you buy something wholesale for $10 and sell it for $20. First, you must identify your goals and determine if you want to rent the house and ultimately, once paid off, have a nice annuity or if you want to flip the property for a more short-term profit. If you are looking to flip and you’re confident that you can find a buyer, consider an adjustable mortgage with a very low temporary interest rate. These adjustable rate mortgages have been the source of a lot of problems, but if you know you can sell for a profit before the mortgage resets (2 to 5 years), you can maximize your cash flow by paying only the interest and then making the principal the buyer’s responsibility. For longer-term real estate investments, fixed mortgages are better because they allow you to plan your cash flow accordingly and get by when things are tougher.
A lot of folks who invest in real estate may be in a hurry to pay off, but you have to keep in mind; you are using rental income to help subsidize the mortgage payment. If you truly have a long-term horizon, you can breath easier knowing that someone else is paying more of the interest and principal each month than you. For rental properties or investment real estate, make sure you are also leveraging all of the tax benefits of depreciation and valid expenses. Sometimes you have to take a step back see things from another point of view.
Tip #2 Whenever You Get The Change Try Do-It-Yourself
Investing your own money in real estate, money is made or lost behind the scenes, not when the final deal is made. For example, you may have turned a $9,000 profit on the first sale price after two months, but if you paid an attorney $2,000, your contractors $4,000, and your real estate agent $6,000, you lost great amount of money on your deal. Don’t be afraid to do-it-yourself you’ll probably realize that you enjoy it and you will save some cash. Here is a do-it-your-self page on Pinterest that will help you get started.
“There’s a lot of common sense involved once you invest in real estate” – National Records Office
There’s a lot you can do to improve your property, such as new tile, landscaping or a shiny new coat of paint, there are just a small portion of things that can really add some value. Hire professionals to do these things for you only if you need the help. For instance, changing locks, putting in new plants or painting the walls are things you can likely do. You certainly do not want to do something you are not capable of doing — that can become even more costly than just hiring a contractor. In your deal, consider the skills you have and what really needs to be done to get the place up to par. In terms of other professional services, perhaps you should avoid hiring a rental agency that will take 10% to 15% plus the first month’s rent; you can place classified ads and answer your own phones.
You may be surprised to find out that you can do many tasks you used to pay for far more efficiently. If you absolutely must remain hands-off on everything, make sure that you budget accordingly so you do not chew up your profits paying service providers.
Tip #3 There is Nothing Wrong With Getting Help
Like any other venture, it is hard to try to tackle it alone when you invest in real estate. Hire the real estate, legal and titling pros when it makes sense. For instance, if a real estate agent comes along and can find you a buyer three months sooner than you can on your own, paying that commission may be far better than paying three more mortgage payments. Hiring an attorney to handle some of the paperwork for issues pertaining to the contract and title might free up some more time to find the next deal or finish painting the investment property. However, if this is your first deal, having a paid advisor might make sense to make sure you avoid any stumbling blocks or legal entrapments. Certainly, you should learn from this engagement as maybe you can handle it yourself the next time you invest in real estate and save yourself some fees and aggravation in the process. Some people, specially men don’t like getting help from others they might see it as blow to their ego but educating yourself is something we should be doing every day.
Tip #4 Trends Change All The Time So Make Sure You Are Up to Date
There are times when we like to think we are up on the latest trend but we could be wrong, but you will be surprised to learn how competitive the business is once you get into it. You will be in the mix with businesses and folks that have been doing this for far longer than you have. While you cannot replicate that experience overnight, you can educate yourself on as many of the issues and trends as possible. Research home prices by following the sales in the newspaper and note the trend of home prices. Look over the classifieds for decent rental prices and even visit homes that may be similar to the one that you are going to list. Visit the local banks and see what is really happening in terms of loan volume and required down payments. You can even use this knowledge to avoid paying too much and perhaps even negotiate a better deal. Education is great preventative medicine against overpricing or under-pricing your targets. A few hours a week and you’ll be doing pretty good. Check out the latest reports from National Records Office to be ahead of the game.
Tip #5 Take a Leap and Make A High Investment
Sometimes we need to step out of our comfort zone and take a risky leap. When investing in property besides your primary residence and building your real estate empire (regardless of the size), the most important rule is to just practice basic business principles. The main goal here is to sell something for more than it cost you to buy it and fix it up or how some people may refer to it “flipping houses”. When renting, you are relying on rental income to subsidize a fair amount of your mortgage, but not the entire thing. Selfishness and dreams of quick bucks will likely lead you to trouble, but making sane, business-focused decisions should allow you to extend your real estate holdings outside of your home. The main idea is to take your time and not be greedy just think of the words “invest, invest, and invest”.
National Records Office understands that investing is like rocket science or speaking a different language, real estate alone is difficult to understand but with a little practice, time, and learning you’ll be on the road to success. Not every invest is an investment sometimes deal flop and you lose money but it’s all part of the experience.