Real Estate Investment Advice
Investing in real estate might seem to be a risky venture given the disintegration of home sales in the United States within the last few years. What looked to be an investment opportunity without end, real estate took a tumble, but it is actually one of the few remaining investment opportunities for middle-class families to build financial security and a nest egg for retirement.
Real estate is not just for the wealthy, like Donald Trump. While certainly many rich people are heavily invested in real estate, it is definitely a market open to anyone with the ability to purchase a property. Real estate investments are easy to understand for homeowners and renters alike, as they can see how much money can be made in purchasing a property and leasing or renting it out. Historically real estate investments average about 10% a year, which is equal to the historic return on stock investments.
It takes more time to adequately manage a real estate portfolio than a stock portfolio, but it can be a lucrative as well as gratifying experience for people with the ability to make a long-term commitment to the investment. Real estate investing is considered leveraged investing when you borrow money to purchase a property and then rent out the property to earn money. The basic premise of purchase a home for the use of rental income has been practiced for many years and there are many who earn a full-time living from this endeavor.
Rental income can be sizeable for sure, but on the other hand can end up being a losing proposition. If you purchase a home that is in need of costly and/or constant repair, you may find that your profit margin is not the only thing that dwindles as you begin paying expenses out of pocket to keep the house maintained. Make sure you have done your research before investing in any type of property for which you are not familiar. It is never advisable to make a large purchase without the advice of an expert, so bring one along on house hunting expeditions.
Unlike investing in the stock market, real estate is a tangible asset and with the rising cost of new home construction, buying homes in metro areas that are in inadequate supply of land on which to build is a wise choice. Likewise, purchasing homes that are within commuting distance of the city and coastal properties are great investments.
Another benefit to real estate investment is that you are in complete control of the investment. There is no board of directors or corporate executive standing in the way of how you manage your assets, as you are the one in charge of interpreting local market conditions, choosing tenants, and setting rent charges. While this is definitely more work than simply investing in the stock market, you are in complete and direct control.
With household sizes shrinking, they are also doubling as the divorce rate rises and families are split apart. The demand for housing is increasing and is expected to do so for many years to come making real estate investment one of the lowest risk, long-term investments around. For people who are looking to prepare for retirement or simply pad their existing income, real estate investment is worth a look.