These are the best of times and these are the worst of times. These words written by Charles Dickens apply to us today, as they did in his time.
Now is an excellent time to buy that first home or invest in apartments or rental housing. If you want to buy a home or buy a house for an investment, you could not find a better time. Prices are down and so is the cost of a loan. There are great deals for first time home buyers. A first time home buyer is someone who has not owned a home in the last 3 years.
It is also an outstanding time to buy a house as an investment. When buying a house for an investment you must decide on how much you can put down, how much you want to pay in monthly payments and how much money you want to take home each month after all expenses. Remember to keep your decision reasonable. After you have determined this, this will tell you what to pay for a house or home.
The current real estate market is in a down turn and many are losing their homes and businesses. This is not a sign of good times for these people. But, for the investor, these are the best of times. Real estate opportunities are everywhere to be found and they are getting better. Now is a good time for the investor to invest in real estate. There is a surplus of homes on the market and not enough people who can qualify to purchase them. The same people who can not qualify to purchase a home, still need a place to live. They have to rent.
Number one rule do not pay the asking price. Shop around and make offers until a seller is willing to accept the offer that will fit your investment formula. Keep in mind, this is a buyers market and there is a large inventory out there. This will require your time and the help of a good real estate agent. Take advantage of your real estate agent. Your agent works at no charge to you. Tell him or her what your needs are. A real estate agent will assist you in locating what you are looking for. Your real estate agent will earn his and/or her income when you buy a home or buy a house through him or her.
ADVANTAGES OF INVESTING IN REAL ESTATE
People invest in real estate for many reasons. The advantages of investing in real estate can be broken down into three general categories:
· appreciation
· leverage
· cash flow.
Appreciation - Appreciation refers to an increase in property’s value due to changes in the economy or other outside factors. Although real estate values may fluctuate, over a period of several years real estate usually increases in value at a rate equal to or higher than the rate of inflation. Thus, real estate is considered an effective hedge against inflation. And when buildable property becomes scarce, the value of properties in prime locations increases even more rapidly.
Leverage - Real estate investors can take advantage of leverage, which is defined as using borrowed money to invest in an asset. If the asset appreciates, then the investor earns money on the money borrowed, as well as the money he or she invested.
Cash Flow - Many real estate investments generate a positive cash flow, as well as appreciate in value. Cash flow is defined as spendable income – the amount of money left after all the property’s expenses have been paid, including operating costs, mortgage payments, and taxes. When a real estate investment generates a positive cash flow, your monthly income increases. Thus, a real estate investment can increase both your net worth (through appreciation) and your income (through positive cash flow).