Maybe you have heard that investing in real estate is one of the best investments to be made. That is because normally the value of properties almost always increases. Theoretically, in order to invest in real estate all you would have to do is buy a piece of property and wait until the value of it to rise. That simple! But some beginners may have a hard time believing that it’s really that easy. And the reason they have such a tough time wrapping their heads around the idea of real estate investing is due to the lack of knowledge and proper planning. Without it could lead to serious losses and mistakes.So before you make the decision to throw hard-earned money into real estate you should consider a couple of things. You should clearly identify the type of money you wish to earn, which could be a lump sum or a monthly income. A monthly income is produced by simply turning your purchases into rental properties. The lump sum one time income would come from either “flipping” homes or wholesaling them. Flipping homes also known as rehabbing homes is when you buy a home renovate it and hold it until you want to sell it for profits. Wholesaling is when you middle man. Bringing the rehabbers and sellers together to earn a profit.Also if you plan on proceeding with the purchase of any type of investment familiarize yourself with all of the different laws and regulations. Especially when acquiring real estate. Because when you’re beginning those laws are among the most complicated.Once you’ve preferred your income stream, passive or earned, then you should do the necessary research to make sure you avoid beginner’s mistakes. Look into profitable locations to buy. Research the comps and rental caps in those neighborhoods. Get an Inspector to check out the foundation, electrical, and plumbing well being of the home. If you’re renting a house out find out good property management companies that can maintain your rental instead. And more importantly make sure you have multiple exit strategies before you even buy a property. Just to protect yourself if worst case scenario was to happen. Because there is nothing worst then own a home you don’t want. Vacancies in real estate investing are common. And if you’re renting out a single family home it could be what I like to call “debt” trimental.Most people want to get started investing in real estate but believe that they don’t have enough money. The best way to go about property investing for these people would be to wholesale properties. All you would need is enough money to cover the earnest fees and the inspecting fees, which can be around a thousand dollars at the most. And you could rake in a profit of $4,000-$9,000 depending on how you structured your wholesaling deal.Now if you don’t have a enough money to invest in real estate you choose an alternative way to invest that will allow you enough capital to invest in real estate and so much more. Click the link below to learn how you can begin to compound your capital towards the amount of riches you desire.
How is real estate defined? In theory, it covers the entire land, property and everything that can be found on the property from natural resources to man-made structures.Real estate categoriesWhen we talk of real estate, it is usually in the context of housing or residential ownership. However, it covers more than family homes because it could also be applied to commercial and industrial assets like farm lands, vacation houses, headquarters, malls, and factory buildings.How value is assessedIt is different from other types of investment because the market value directly depends on the quality of its location. Local issues like the area’s economic standing, its crime rate, the quality of education and the cost of property tax are factors that directly affect the prices of a property. Throw in more issues like global and national recession, and you have very unpredictable market.Investment real estate and real estate investmentAre the two the same? No. These two phrases are used in totally different contexts. Investment real estate is a type of property acquired for the purpose of generating income as an asset, not as a home for the family. When a buyer acquires land for the reason of building his financial portfolio, then it is investment real estate. However, when you say real estate investment, it covers every type of reason for buying property either for commercial or residential use. Thus, the house that you are paying mortgage is a real investment property. So is a vacation house in, say, Carmel, Indiana.Understanding mortgageWhen you say mortgage what comes to mind? For sure it’s about paying the bank every month with a fixed amount until term ends or else foreclosure, is the image that will come to mind. Well, the picture is not off the mark. The reason why most buyers prefer to buy property through a loan is that a buyer just pays the value of the property in increment and not obliged to pay the whole amount upfront.Factors that move the market valueThe location of the property is the number one factor that determines the market value. Apart from demographics, the economy, government policies especially on tax and interest are aspects that matters for those who are planning to put money on realty.A lucrative businessThere is always a potential of earning millions if you get into this industry. However, to be successful in this business, you need to understand the process. Realty is more than just buying and selling land. There are lots of considerations to look at and rules to follow, if you want to be in this business. Mortgage, interest, and property tax are only dusts in the surface when talking about this industry.
If you want to buy a home, but aren’t sure if your budget can handle soaring real estate prices, we’ve got good news. There are things you can do to stretch your buying power. With the help of your real estate agent – and these 10 tips – you can become a savvy home buyer without breaking your budget.1. Get pre-approved for your home loan. This means, fill out a loan application and go through the process of securing financing. That way, when you’re ready to seriously evaluate real estate, you’ll know exactly how much home you can afford. And you can prove to a seller that your offer is sincere.2. Explore creative financing options. During the home loan pre-approval process, ask about ways to get creative with your financing. Low down payment options, first and second mortgage combinations and first time buyer programs might help you afford more funding. Many lenders are now offering interest-only home mortgages; just make sure you thoroughly evaluate the terms for this type of home loan. Down payment grants are also available in some instances and might be worth investigating or discussing with your realtor.3. Sell your existing home first. Although selling your existing home before finding new real estate to buy can be a little nerve wracking, any inconvenience will be offset by your ability to make an offer with cash in hand. Contingent purchases are not the best when negotiating to buy a home. Having your financing in order and your bags packed will give you the advantage in a competitive market.4. Look for vacant real estate. Perhaps a seller’s job has transferred him out of the area. Or maybe a family purchased a new home before putting their existing one on the market. In any case, a vacant home could be just the deal for a savvy home buyer, so have your realtor look for vacant property in your preferred neighborhoods. And keep in mind, the longer a house stays empty, the greater your negotiating power will be.5. Consider cosmetic fixers. If you’re handy with a paintbrush, a toolset and gardening equipment, consider buying real estate in need of cosmetic fixing. Property that lacks curb appeal needs minor handiwork or the yard overhauled could end up being the home of your dreams for a price you can afford. You just need to look beyond the ho-hum to see the potential of a cosmetic fixer.6. Buy a home that’s a major remodel project. If you want to live on Lake Washington, but can’t afford a $2M home mortgage, consider buying a dilapidated cottage on a fabulous lot with western exposure. In time you’ll need to gut the existing home and build from the ground up or contract significant home improvements. But in the end your property value will skyrocket. If your carpentry and other construction skills are well-developed, you can save even more and accrue “sweat equity” during your remodel by doing much of the work yourself.7. Don’t discount bank foreclosures. One person’s loss could be your gain if you buy real estate in foreclosure. Although the search for a decent foreclosure may take a while, your realtor should be able help. The U.S. Department of Housing and Urban Development (http://www.hud.gov/) can be an excellent resource for foreclosed properties. Because HUD houses are sold at market value, your best bet will be homes that need cosmetic work or even major repair.8. Land with a manufactured home. Sometimes, to buy a home on a budget, you need to look beyond convention. Even if your wish is to buy real estate, you may have to settle for a piece of property in an outlying area with a mobile or manufactured home. Discuss this option with your real estate agent and try to keep an open mind about this possibility.9. An older, smaller home. Older homes are typically priced much less than newer construction and don’t tend to create buyer bidding wars. If you can enjoy life in an older and smaller home in a neighborhood or suburb off the beaten path, this could be your ticket to real estate ownership.10. The cheapest house in the best neighborhood. You have your heart set on a specific – and expensive – neighborhood. Maybe it’s the schools that you’re interested in. Or perhaps it’s the close proximity to downtown or the waterfront. In any case, a budget-savvy buyer will look for the least expensive home for sale in the neighborhood. If you’re not in a hurry, you can even play the waiting game to see what properties come on the market. Your real estate agent can be a real asset in this case by investigating potential sellers.Buying real estate without breaking your budget will require research and compromise. On moving day, however, you’ll have the satisfaction of knowing that your homework paid off!