Becoming a real estate investor involves buying properties to make a profit - usually through renting them or selling them. The main advantage to investing in real estate right now is the strong rental market - there are a lot of potential renters willing to help you with making that profit mentioned above. A second advantage is leverage - real estate is one of the few things that can be purchased where you only need a small portion of the purchase price available.
One main disadvantage, however, to real estate investing is that it is not a liquid asset and it is one that requires maintenance. There is also no guarantee that your asses will maintain its value as the market fluctuates.
Most wise investments are a matter of timing. Many buyers are taking advantage of the low mortgage rates we are seeing, tax incentives, and lower home prices in general - now could be an ideal time for someone to make an investment purchase. While home prices will not likely keep dropping, it will be some time before they go up again, and again, timing is everything and sometimes luck plays the most critical role.
Below are some simple steps to guide you along the way...
- Write down your investment goals on paper - studies show that those who write down their goals have a much better chance of reaching them.
- Study the real estate market in which you plan to invest - get familiar with the area, how many other rentals there are if you plan to rent, or what homes have been selling for if you plan to sell for a profit.
- Devise an exit plan - do you plan on buying and selling right away or renting it out long term?
- Assemble a team to help you if you can - you probably won't know everything but having people around you, such as contractors, agents, appraisers and marketing specialists will get you moving in the right direction.
- Set aside structured and scheduled time to work on your investment - nothing comes easy and making sure you dedicate time and effort to your goal will help ensure success.