Contrary to popular opinion, anyone can get involved with real estate purchase and investing. Most of the barriers people talk about are exaggerated – or simply don’t exist. Here are a few truths about real estate:
- You don’t need perfect credit to buy a home.
- Good investments hold and increase in value.
- The process isn’t complicated if you have guidance.
Making the Right Decisions
Don’t think of real estate as risky. Like almost any other sector of the economy, there are varying levels of potential liability regarding real property products and investment activities. For example, investing in private equity real estate funds could be relatively low-risk, while house flipping often requires leveraging a lot of your operation’s capital. That’s why it’s often best to focus on what fits your lifestyle.
Working people can generally handle more risk. They have more of an opportunity to repay creditors or rebuild savings if something unexpected happens. Retired investors might gravitate more towards safer investments, especially if they’re interested in multi-generational strategies.
Beyond the Crash
Home buying got somewhat of a bad rap from the financial crisis, but the fact is that the practice remains one of the best ways for smaller investors to gain substantial equity. There are few paths to financial growth other than home ownership that offer such a low bar to entry – entrepreneurship is one example. However, whereas starting a business is a constant challenge, buying and maintaining a home is generally less of a demand on your time.
Furthermore, the financial crash was mostly due to some less-than-realistic loan practices on the part of mortgage lenders. Many of the smaller ones went by the wayside, and the larger lenders now conform to much stricter regulations. The bottom line is that, when you get a loan these days, it’s likely that the bank is nearly certain you’ll be able to pay it off.
Buying for Growth
The key to real estate investment is to buy with an eye to sell. Whether the plan is to sell today, tomorrow, or after a 25-year mortgage is paid off, smart investors buy homes that they’ll be able to put back on the market at a profit.
Your strategy will change depending on your schedule, as well as the amount of work you’re willing to put into your property. Common wealth-building strategies investors use include living in the homes they buy, rehabilitating distressed houses, and renting out properties. Within each of these strategies, there are nearly limitless variations – and it’s always possible to change gears and modify your tactics if the market changes before your exit plan can be realized.
A Versatile Investment
One of the nice things about buying property is that you can get involved whomever – and wherever – you are. You don’t even have to be in the same time zone if you work through an agency. You can buy slope-side equity real estate in Utah while sitting in a cafe by the Danube in Budapest, for example. In fact, you can buy, sell and rent property all remotely. All you need to do is find a market with property that fits your financial plans.
Nobody can predict the future, but the current market landscape and historical data can serve as important guideposts. For example, a market that weathered the financial crisis with minimal fluctuation in value might represent a more stable investment than an area that crashed. Look for comparative data that really compares, and seek out the opinions of people who have been on the ground in your target area for at least a few years. With the right strategy and good information, your investment could prove to be your path to wealth.