Wednesday, November 11, 2015

Real Estate Investing for Beginners

The housing crash has made it possible for you to invest in really attractive homes without having to spend a small fortune and many investors are making the best of the situation. If you want to get a share of the real estate pie but lack the knowledge and experience to go about it with confidence, we are here to help. Here are a few points you should know about the two ways in which you can make this investment.

Direct purchase of property

The most evident way is to buy a house or other kind of property directly from a seller. If you can make a substantial investment, you may even be interested in owning a small apartment complex. If the home or apartment complex is in a good location, finding tenants for the property is easy and you can demand good rentals from them too. Make sure that you comply with fair housing rental regulations, building code requirements and other legalities. Also factor in repair and maintenance costs that you will have to bear before you invest in property.

Investing in REITs

Another way to own real estate is to invest in a Real Estate Investment Trust or REIT. With these you buy shares in a portfolio of properties. REITs give you an opportunity to invest in real estate that may be unaffordable to you otherwise. For example, buying a sky scraper office complex in Manhattan is impossible for you but buying into an REIT that includes this property may be a viable option. In addition, REITs eliminate the hassles of managing maintenance and tackling tenants that you cannot avoid when you own a home or apartment complex that you have let out.

Points to keep in mind with real estate investment

Remember that real estate is a huge asset and a substantial portion of your savings is going to be locked up in it for a fairly long term if you want to make good returns on investment. It is not advisable to do your investing without taking adequate care and giving enough attention to the task. These are some points to keep in mind before investing:

·         Do some research: Whether it is identifying a good property or the right location to buy your home in or a reasonable price to agree upon, doing your homework before making your purchase is a must. After all, you do not want to end up pouring your hard earned money into a property that cannot yield the returns your expect.

·         Be patient: Real estate is typically a medium to long term investment so expecting your property value to soar overnight is simply not a good idea. You may get pressured into selling the property too soon, before it has had time to increase in value. Make a plan beforehand about the time period that you are looking at for your investment to give you returns and once you make the purchase, remain patient until you are sure to get the best returns possible. 

·         Don’t make emotional decisions: It is easy to get emotionally attached to property that you are looking to buy but allowing the emotion to sway your judgment can be a fatal mistake in real estate investing. No matter how appealing a home may be, it is definitely critical to look beyond the appearances and check if the house really makes a good buy considering its age, its condition, location, features, price and other aspects.  If you cannot make an objective decision, call in a  friend or relative who can tell you whether the property makes a worthwhile investment for you.