Over the years the real estate market has had some interesting ups and down, twist and turns. However, real estate investing is still the best way to increase your financial portfolio.
Your geographical location plays a big part in how soon you will build equity in your property. For instance a Spanish style bungalow in Miami Florida’s South Beach Community will no doubt build equity a lot quicker than a manufactured home located in Huntsville, Alabama.
This month we’re going to talk a lot about various aspects of the real estate industry, but today, it’s all about investing. I am going to give you some tips on practical steps to take before and during your real estate acquisition:
1. Purpose – The first question you need to ask yourself is, “why am I investing in real estate?” Is the purpose of your investment to live in the property as a primary residence and hold on to it for 2 to 3 years to build equity or are you strictly interested in a rental investment? Even if you are solely interested in a rental or investment property, I would suggest that you ALWAYS purchase investment properties that you would be willing to occupy if the need should arise. In today’s economy you want to always be prepared for the unknown.
2. Location – After you have made the decision to purchase a primary residence or an investment property, the next consideration is location. In the real estate business you’ll hear professionals utter this phrase, “location, location, location!” So, it’s really all about were your property is located. Try to avoid purchasing property located in a neighborhood that’s heading in a downward spiral ( i.e. large number of foreclosures, un kept grounds, rising crime, etc). Always look for communities that are established or at least up and coming. Location will effect the amount of money you’ll be able to request once you sell your property and it will also affect the amount of money you’ll be able to ask for from a potential renter.
3. Property Type – Are you looking to invest in a SFR, Condo, Townhome or Manufactured Home. Most people prefer to invest in single family residences while others like the idea of city living and opt to purchase condos or town homes. However, there are a select few that prefer to invest in land more than in the property itself so they’ll be good candidates for manufactured homes which can be found in your more rural locations on multiple acres.
4. Upgrades – Now that you’ve decided what type of property you want, the next thing to consider is the upgrades. Obviously if you’re purchasing new construction you might not be as concerned with upgrades as if you’re buying a much older home. Remember kitchens and bathrooms tend to make or break a sales transaction. If people think that they’ll have to pay big bucks to update the kitchen or bath they are more likely to negotiate the sales price down. Upgrading a kitchen can be as simple as refinishing old cabinets and replacing the countertop with granite tiles or butcher block.
5. Consider the Time – I know most people are looking to make a fast buck in the real estate business and sometimes that works out just the way you plan. However, more likely then not, you’re going to have to hold on to your investment in order to really get the most out of it. Remember, it depends on the upgrades and the location as to how quickly your property will increase in value. Always look at the trends for the neighborhood and get a good real estate professional to look into recent sales in the overall area. You’ll need to be aware of what you’re working with before you price your home. You never want to list your home for less than what the home is worth, but you also don’t want to scare off potential buyers by overpricing it.
So, the question remains, is investing in real estate a wise decision? What do you think?