As prices for real estate continue to stagnate and even plummet throughout the United States, properties that even a year ago were out of reach for many are now sitting on the market with more reasonable prices. This new accessibility to property is enough to convince some individuals that now is the time to try their hand at investing in real estate.
Nonetheless, jumping into real estate investing on a whim or a hunch without proper preparation is a surefire way to fail. Fortunately, many sources are available for boning up on the basics. There are numerous books, CDs, and DVDs on real estate investment, and many of these are in local libraries. In addition, when the words “real estate investing” are typed into any search engine, millions of Web sites turn up.
Learning Real Estate Investing Basics
It takes a while to wade through this available information. In the end, it becomes evident that there are eight basic steps for increasing the chances for success in real estate investing:
- Understand the components of return on investment, including cash flow and appreciation
- Write an real estate investment plan that specifies financial goals and timetables for reaching them
- Carefully choose the form in which to own property (as an individual, a partnership, corporation, etc.)
- Turn to real estate agents, attorneys, tax advisers, and other professionals for expert guidance
- Study the target areas in which to buy property
- Line up affordable financing
- Avoid overpaying for real estate
- Manage the property diligently
These steps merely outline what is involved in becoming a real estate investor; there are many factors within each step. Absorbing and understanding all this information is not as daunting as it may appear. No special course work or degree is necessary to understand the principles involved, particularly if the novice investor lines up a team of professional advisors. As with anything new, there is a learning curve to real estate investment. Patience is necessary; any short cuts can lead to disastrous decisions.
Yet, studying is not enough and over-caution can be paralyzing. This is why it is essential to get out there and buy – it is the only true way to learn the business of real estate investing.
Real Estate Buyer’s Comfort Level Trumps Economic Outlook
Although the economic outlook and real estate markets remain uncertain, this should not deter individuals from investing in real estate. As Rhonda Duffy, broker of Duffy Realty of Atlanta, wrote in an e-mail to this reporter, “The timing and outcome of a purchase … have more to do with the specifics of the property and the motives of the buyers and sellers than they do with any macro economy or market-driven issues.”
According to Duffy, in most cases, the determinative factor for when and how to best acquire property is the comfort level of the buyer, “which encompasses his or her financial and personal criteria.” Thus, she observed, “Like in most things, everything comes down to how it affects ‘me.’”
Just make sure that “me” is armed with adequate and reliable information.