Investing In Real Estate
2:06 AM
Real estate investing is a hot topic again. It's a funny thing how one day everyone wants to dump their real estate investments and the next day everybody is jumping back in. Well, it's no wonder. The real estate investing community went through such a gyration, including all of the crazy buying that speculators went through over the last few years. The last two years have been one of the worst in history.
If you look at the graphs, the housing prices in many cities and states have dropped 20% to 40%, and even 50% in some hard hit areas. The drop resulted to a much more affordable homes. The "bad behavior" on the part of speculators have discouraged and the government has stepped in as well to help people who would like to acquire these homes. But now, real estate investing is back on the upswing. The number of property values started to make sense again.
Now, how can one benefit from real estate investing in this recession. Think about the numbers. If you can finance a $100,000 mortgage at 6%, your mortgage payment is somewhere in the $600 range. If you add property taxes and insurance, your monthly outlay would probably be around $750. Now, lets say that you can rent that property out for $900 a month. You now have the basis for a cash flow positive investment.
You can hold onto that property for like 10, 20 years and reap great financial benefits as well from that real estate investing scenario. Makes sense, right? Outside of general maintenance on the properties, you're getting someone else to pay for your mortgage, that is why it works. You could also be the beneficiary of a big windfall, if of course property values increase over a period of time, when the times comes for you to sell the property.
It's safe to say that real estate investing plans have failed for the last several years. Just like any other plans, the plans of people who bought properties at extraordinarily high values did not fall accordingly. This is because recession happened, and the properties have lost their value. More so, no one could re-finance or carry the loan payments any more.
It could happen to anyone. "It" being the drastic change of fortunes. Not anyone can just go into real estate investing haphazardly. "Location, location, location," an old phrase that is especially true in real estate investing. It's important to make sure to "pencil in" the numbers. If it's convincing that you're going to take a cash flow negative property and hold on for property value increase, think again. Those may never come back again. "Those" being the market.
This is why it's extremely important to know what you are doing in real estate investing. There are several companies, gurus, etc. who purport to tell you how, what, when and how much. Many of the gurus are fly-by-night scammers. They will try to sell you a bill of goods. You should make sure to look at gurus who have been around a while and have a loyal following. Some examples of these people are Donald Trump, Robert Allen or Carlton Sheets. Basically, they've been there, done that.
If you look at the graphs, the housing prices in many cities and states have dropped 20% to 40%, and even 50% in some hard hit areas. The drop resulted to a much more affordable homes. The "bad behavior" on the part of speculators have discouraged and the government has stepped in as well to help people who would like to acquire these homes. But now, real estate investing is back on the upswing. The number of property values started to make sense again.
Now, how can one benefit from real estate investing in this recession. Think about the numbers. If you can finance a $100,000 mortgage at 6%, your mortgage payment is somewhere in the $600 range. If you add property taxes and insurance, your monthly outlay would probably be around $750. Now, lets say that you can rent that property out for $900 a month. You now have the basis for a cash flow positive investment.
You can hold onto that property for like 10, 20 years and reap great financial benefits as well from that real estate investing scenario. Makes sense, right? Outside of general maintenance on the properties, you're getting someone else to pay for your mortgage, that is why it works. You could also be the beneficiary of a big windfall, if of course property values increase over a period of time, when the times comes for you to sell the property.
It's safe to say that real estate investing plans have failed for the last several years. Just like any other plans, the plans of people who bought properties at extraordinarily high values did not fall accordingly. This is because recession happened, and the properties have lost their value. More so, no one could re-finance or carry the loan payments any more.
It could happen to anyone. "It" being the drastic change of fortunes. Not anyone can just go into real estate investing haphazardly. "Location, location, location," an old phrase that is especially true in real estate investing. It's important to make sure to "pencil in" the numbers. If it's convincing that you're going to take a cash flow negative property and hold on for property value increase, think again. Those may never come back again. "Those" being the market.
This is why it's extremely important to know what you are doing in real estate investing. There are several companies, gurus, etc. who purport to tell you how, what, when and how much. Many of the gurus are fly-by-night scammers. They will try to sell you a bill of goods. You should make sure to look at gurus who have been around a while and have a loyal following. Some examples of these people are Donald Trump, Robert Allen or Carlton Sheets. Basically, they've been there, done that.
About the Author:
Darryl Degenhardt, a well-known professional who almost gave up on real estate investing. Darryl, just like real estate investing, is back upswing once again.
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