By: Tal Baron
The stock market is looking fairly bleak. Some investors are beginning to panic and seeking other avenues for investment opportunities. Although the housing market does not appear to be rebounding as quickly as anticipated, real estate is still one of the soundest investments that can be made today.
We are experiencing historic lows for interest rates on nearly all mortgage options and these rates will not last forever. Interest rates and home prices are expected to hit bottom this year and begin to rebound. For first-time investors or even the avid investor, it is a great time to take advantage of low rates. Below are some factors to consider when deciding whether or not to invest in real estate:
Discover Your Options
As an investor, it is important to know the variety of real estate options. All investment properties and opportunities are not the same. One of the most popular options for investing in real estate is becoming a landlord and renting out your property. The other is to buy a property, restore it, and resell it for a profit (also referred to as “flipping” houses). For first-time investors, it is often recommended to start with residential real estate because commercial and land development areas still facing very difficult market conditions.
Appeal to a Large Audience
Just as the experts always say, it is all about one thing: location, location, location! If you are seeking to become a landlord, finding a property to rent out will be most heavily dependent on the location. Finding homes in highly populated areas are ideal places for investors to purchase. It is wise to avoid rural areas with low population, as there will be a smaller pool of potential renters.
Also finding homes with more than one bedroom and bathroom is recommended, as it will appeal to more potential renters. If the target pool of renters is families with children, being within a good school district will often be one of the top priorities. Properties near shopping malls, public transportation, or other amenities are highly attractive qualities when it comes to potential renters or buyers, if selling is an option down the road.
Make Sure You Can Weather the Ups and Downs
Consider speaking to potential lenders about how to handle the ups and downs of investing. Make sure that you have the funds available to handle any repairs or terms of vacancy. If the home sits vacant for any period of time, the mortgage will still need to be paid. It is recommended to have at least six months’ worth of mortgage payments saved up. Likewise if selling the home is an option, mortgage payments will need to be paid until the house closes.
[Mortgage Help: Get your free credit report and see if your credit score is mortgage qualified]Investing in real estate can generate a consistent flow of income and your investment can rise in value over a period of time. Property investments can be far safer than the stock market or other investment opportunities. If being a landlord is not for you, consider flipping houses if you have the availability to obtain funds. Flipping houses can actually help the housing market by repairing properties and making them habitable again. Typically after they are repaired and placed back on the market, first-time homebuyers or owner-occupant purchasers are highly interested.
Investing in real estate is not a niche for everyone, but for those looking for a secure investment it can be a solid option in today’s economy. Whether looking to become a landlord or buying to restore and re-sell is the intent, there are options out there for nearly all investors.
Have you ever invested in real estate? What was your experience like? Would you recommend it to others looking for a high-return investment?
Tal Baron writes for Currensee, a FOREX trading social network where investors can potentially earn a high return on investments through currency investing.