Real estate tips for new investors

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).

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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.

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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:

“Telling the Difference Between a Quality Home Insurance Policy and a Poor One”

“5 Questions to Ask Before Buying a New Home”

“The Ultimate Cheat Sheet On Energy Efficient Homes”

“10 Reasons Not to Buy a Used Home”

“5 Ways New Homes Save You Money”


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.

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11 thoughts on “Real estate tips for new investors

  1. I would love to invest in real estate. I didn’t realize how difficult it is to start! I’ll make sure that I understand the different terminology! I’ll start by flipping homes. It seems like the best way to start off.

  2. I’ve been thinking about buying a home soon. When I do, I want to be sure that I am saving as much money as I possibly can while getting a beautiful house. Do you have any advice about buying a home when you are traveling? We are moving soon, and we would prefer to have a home lined up for us once we get there.

  3. Thanks for the advice. I have heard a lot of people saying they are worried about buying a house because of the 2008 crash. I agree with you. The market is in a good place with low-interest rates. I say it is a great time to buy while you can finance for cheap. My husband and I are looking at getting our first home. I can not weight for this adventure.

  4. I have been wanting to invest in real estate for quite a while now, but I have been a little nervous to jump in and try. Like you mention, investing can involve a lot of debt and has potential to lose more money. That scares me a little bit. I think the goals you have on here are good though. Appreciation is something I forget about. Even thought it is a big investment now, it could be worth it in 5 years. I just need to get the courage and do it!

  5. I didn’t know that selling a home and waiting a few years will increase its value! Does living in the house affect the price? Will it make it more expensive or cheaper?

  6. I really like your advice to flip your home. I think that many people don’t understand the kind of return they can get when they purchase their home. A fixer upper might be what you need. Do you have any other tips about finding a good home, whether or not you plan on flipping it?

  7. When I was growing up, my parents had a lot of real estate properties that I would help them with. They made a lot of extra money by renting them out and I enjoyed maintaining them. I was, however, really surprised at the statistic in this article that explained that there is a yearly 2% inflation rate. That means that it would be smarter to invest right now!

  8. I never knew that home values generally grew over time. My husband and I are actually looking to buy a new home within the next year. Hopefully an affordable price range, and in a safe community as well.

  9. My husband and I are planning on investing in real estate and we know it’s not that easy. Thankfully, you gave us an idea of the different goals of most investors when they open up real estate investments. These are extremely helpful as you mentioned that all of these methods work!

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