Thousands of new people start investing in real estate every year. There is a reason for it too. The real estate market has traditionally been one of the most steady investments money can buy. While the stock market has lost large amounts of value multiple times in the last few decades, the housing market has not been nearly as volatile.
A lot of people today are still a little wary after the housing market crashed in 2008 and millions of investors and regular Americans lost their homes. Letting one isolated event, or even events, keep you from investing is a bad idea. The US has a targeted inflation rate of about 2% a year currently. What that means for the everyday American is that if they aren’t making at least 2% on their investments each year, they are actually losing money (because purchasing power decreases).
Getting started is not easy, however. Real estate investing involves getting into a lot of debt typically. It also has the potential to lose a lot more money, just as it has a lot of potential to gain money. There are a number of different reasons to purchase real estate property, but every single one of them involves making money.
Most real estate investors have a few different goals when they open up investments. They are as follows:
Appreciation – home values generally go up over time. This means that buying a home today, and selling it in 5 years, will likely result in tens of thousands of dollars in profit.
Cash flow – a lot of investors purchase properties with the plan to rent them out. Most people have rented from a landlord at least once in their life. A lot of times it is frustrating knowing that you are paying someone else mortgage. It doesn’t have to be that way.
Flip – a lot of real estate investors will do what is called a fix and flip. They purchase the home, use someone else money to do repairs that increase the value of the home significantly more than the cost of the repairs, then turn around and sell the home for a quick profit.
All of the above methods work. Thousands of investors make profits using each method each year. It is up to a first-time investor to figure out what their strategy needs to be and what works best for their situation. For example, fix and flips typically take a lot of time. You have to be pretty active in the house to make sure things get done correctly. On the flip side, buying a home for appreciation tends to be more hands off. Many of these people actually use property managers that do almost all maintenance and deal with renters. These investors may not ever even see the property they own.
The thing that scares most people off of purchasing real estate is simple fear. Most people are worried about the numerous kinds of things that could go wrong. Fortunately, there are ways to alleviate almost all of your risk. Build a solid home insurance policy that covers almost anything that could happen. If you are worried about appliances, water heaters, or A/C units breaking, try getting a home warranty policy. While some investors think these are a bad deal, others feel that the peace of mind that comes from knowing you won’t ever have to deal with expensive repairs is worth $40-$50 a month.
The key with real estate investing is just to do it. No investor that is seriously into it has not made mistakes. Learn from the mistakes, get back up, network with others, and you will succeed in real estate.
Check out these other related articles:
About Adams Homes:
Founded in 1991, Adams Homes is known as the premier home builder and is one of the largest privately-held home building companies in the southeast. Adams Homes has built more than 40,000 new homes since 1991 and builds in seven states including new homes for sale in Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee with corporate headquarters in Gulf Breeze, Florida.
Discover all Adams Homes’ communities, model homes and homes for sale on our website, www.AdamsHomes.com. We have new homes for sale perfect for the first-time buyer, move-up home buyer, who desires to upgrade to a more accommodating new home, and the empty nester who desires to downsize to a smaller home.
While you’re at our website, explore our mortgage calculator and obtain financing information.