Before you take your good real estate investment ideas and spend your life savings think carefully about the consequences. Over the past several months several hundreds of thousands of families lost their homes due to rising interest rates and a gloomy economy. Millions of investors are watching their retirement savings plunge with no signs of relief.
As a direct result hundreds of thousands of homes are being foreclosed and being sold for pennies on the dollar. So is it a good time to start investing in real estate? I think it’s a great opportunity to take advantage of the real estate bust. Banks are selling houses off at incredible losses to recoup some of their bad investment decisions. However, don’t make the same mistakes that other have made. Read over this list before making any real estate investment purchase.
First, have a clear plan of what you want to do with the real estate. Do you want to purchase a run down house that needs a lot of work and flip the house for a quick profit? Do you want to purchase the real estate as a rental property? Or do you want to purchase the home as your main residence with intentions of reselling it in a few years for a profit?
Real estate is a great investment, but make sure that your plans will be profitable. Do some research about the surrounding areas. Is the city/town growing or are people actually leaving the area? If you are planning on flipping the house you need to find the average time that houses sit on the market for sale. If you are planning to use the real estate as rental income find out how much you can rent the house for each month. Finally, if you are using it as your primary residence think about improvements you will want to make to the house to live in, will it cost a fortune to make you happy?
Make sure you can actually afford this investment. Real estate is just like any other investment, don’t spend more than you can afford to lose. However, with real estate it’s much easier to lose because it’s a payment that you have to make. If you invest in a 401k plan or similar retirement account you can always stop the investments if you get in a bind, but once you close on a house you are stuck with that payment until it’s paid for.
Get an expert opinion about the structure of the home. Most states require a home inspection before a home can be bought or sold, but always use an outside source. Make sure the home is structurally sound before you sign on the line. Talk to neighbors in the area, maybe they can give you information about the home that an outsider wouldn’t know.
If you think you have good real estate investment ideas, just remember always do research. A little time now can save you thousands of dollars in the future.