Investing In Housing: 10 Tips
Here are some tips to help individuals considering investing in housing. Investing in housing can be profitable, but is also filled with risks. With the recent downturn in the real estate market, there are current great buys in real estate as well as many people and businesses that need to rent. This creates a great opportunity for investing in housing.
- Develop a solid credit score. One great tip that many overlook for investing in property is having a good credit score. The difference between a point or two on an interest rate is huge. An investor needs to pull a report, fix errors and pay off past due marks.
- Live in the investment. One of the most enjoyable ways to invest in housing is to move up in house when a bargain is found. The home can later be sold when the market improves. Sales of personal residences are tax advantaged as well.
- Only buy bargains. Paying too much for housing is one of the primary ways investors lose money on real estate. Those investing in housing need to learn as much as possible about local real estate to determine value. An investor needs to have patience to find a great deal and sit on the money until one is found.
- Learn to find bargains. Developing contacts at local banks and credit unions and real estate offices is a great way to find bargains. Get word out that you are looking to buy and can do so quickly.
- Create a real estate network. When there is a problem or opportunity, a housing investor needs to have a skilled team to assist him/her. General contractors, plumbers, electricians and other professionals that can be trusted are a great asset.
- Learn to rehab properties. Many foreclosed homes are found in less than ideal conditions. Being able to buy a problem home and fixing it up is a great way to make money. Remodeling can add risk, but is worth considering as well.
- Hire a good real estate attorney. From sales agreements to landlord/tenant issues, a good real estate attorney is a must. Real estate attorneys can also be sources of information on bargain home. Attorneys can help investors in housing navigate the sometimes complicated zoning laws as well.
- Have money available for emergencies. Unlike many investments, those investing in housing need to be able to quickly generate cash to repair the investment. A leaking roof, cracked wall or other problem can show up unexpectedly and cause expensive repairs. A large emergency fund of cash or a line of credit at a local lender should be available to the investor.
- Become a landlord or hire one. Not everyone is cut out to be a landlord. Real estate management companies can help operate rental housing, but they will have to be paid. Be aware of costs and figure it in before purchasing.
- Invest in REITs. Real estate investments trusts (REIT) are a hands-off way to invest in housing without directly owning homes. Look for REITs in a similar manner that you would investigate a stock. Another reason to consider REITs is that they are tax advantaged compared against many other investment securities.