Real Estate Investing = Real Risk or Real Opportunity?
Today’s economy has altered the complexion of real estate investing. Gone is the supposition “property values only increase.” Thus, successful investing takes intelligence and luck - one you control, one controls you. So what in the world is there to do in what the media calls a “dead” real estate market? This is NOT entirely a dead market, you just got to know how to put the shock paddles to it and revive to achieve Real Estate Investing Success!
The answer depends entirely on:
- The Type of Real Estate
- Your Financial Situation (Cash/Loan), &
- The Time You Have Available to “Play”
Rental property gives you cash flow/income, but many risks as well, including; vacancy, damage, depreciation, location/competition, and availability. Rental of a single family home, apartment, or office differ in risk potential and reward. It takes both brains and luck to accurately forecast short/long term value, and to speculate based on the past is the wrong way to proceed.
Buying and selling homes has so many variables only a crystal ball can successfully predict. Today there is little likelihood of quick profit even with the high availability and bargains. Yes, there are incredible deals on undervalued homes if you’re looking for a place to live, for you have time on your side, but turning around for immediate profit is simply playing poker, and you best study your cards.
Investing in real property today is smart if you have ‘time’ on your side. The advantages are high property depreciation and low interest loans, but you need time and capital. Even home bargains costs money every month, so if you expect to buy low now, rent, and sell high later, you need to do your homework. Why? It takes little time for vacancy to eat up profit, neighborhoods change, and damage and delinquency can quickly mean major loss.
The economic downturn does shed a positive light on purchase of real estate due simply to that high depreciation and soaring selection. But the quick drop in real estate value is not likely to be followed by a quick rise anymore than a quick downturn in the stock market means quick recovery. Will the cost of real estate rise? Most certainly it will, but unknown is when.
Remember, numerous variables control the real estate market and thus determine your success or failure. Many you can assess and weigh with the ample resources available online and local. It is imperative you carefully collect and study the intelligence you need regarding investment direction and goals. Then, assess your financial situation to determine the resources you have to invest knowing the money will no longer be available. As well, look at the monthly burden an investment carries and determine if it is one you can maintain long-term, and set a timeframe for which you’re willing to accept the burden (the longer, the more likely for success).
Yes, based on today’s market, intelligently investing in real estate can be a wise choice if you prepare properly. Just remember three things; first — a loan is not a resource, it’s debt that must be managed; second - don’t guess, use solid intelligence, and; third — real estate is a time dependant investment using a clock with no hands.
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