Is Investing In Real Estate A Wise Decision?

Investing in real estate is older than investing in the stock market or many other investment types.  When property rights were created and one experienced the ability to sell a property with a gain, this became an investment choice.

Any seasoned investor will tell you how important it is to research before making the commitment. First you need to ask yourself some questions:

1. What are your long-term goals? Are you buying a distressed property, investing some money for improvements and selling it for a gain or are you holding onto the property for a longer period of time?
2. Is your financial situation right for an investment? Do you want to use your cash or do you want to leverage the purchase?  Talk to an experienced lender to discuss the options you have.
3. Are you a conservative investor – or a high risk investor? Maybe the purchase of a new home is your choice. Most come with a warranty and usually have only a few repairs necessary during the first years.  A new home is best purchased in the beginning as you can build up equity quickly because the builders typically increase the price regularly.
4. Are you able to do some repairs yourself, or do you have to hire someone? You have to estimate the cost of the repairs.
5. Study the market. You may need some help with this. Maybe you want to consult a Realtor in your area. Markets change quickly and you need up to date information.

Finding the perfect investment may take some time. Be patient and examine each possibility thoroughly. Investing in real estate is a little more complicated than investing in stocks and bonds, but it has become very popular in the last few years. Many investors used their stocks to invest in real estate after the financial crisis.

If you decide to hold on to the property and rent it out, you have to be prepared for unexpected costs like vacancy, the tenant damaging your property, or the regular maintenance. If you want to hire a management company so you do not have to deal with the maintenance, that is an expense lowering your cash flow.

Investing in real estate is not a liquid investment. You should seek professional advise before jumping into a real estate investment, whether it is a commercial or residential investment. Find yourself a Realtor in the market area who will listen to your needs.

Some people invest in real estate for appreciation, but investing for cash flow is rewarding. Why? You want to have money coming in after paying the expenses for your mortgage. That is considered positive cash flow. The rent will increase over the years – but not your mortgage payments. So your cash flow increases and eventually your loan will be paid off and your cash flow jumps up dramatically. Your investment may allow you to retire early. So the answer is: yes it can be a wise decision to invest in real estate, but it requires research, education, advice, an financial capability.

Source: DelRayNewspaper.com