Whether you are buying or selling a home, there are many truths about real estate you should know.
8 Truths about the Real Estate Industry
1. Real Estate is a sure way to wealth.
Real estate is a vehicle for producing income and acquiring wealth in a gradual process. Real estate provides the highest returns on investment. Investing in real estate is comparable to starting your own business, especially individual holdings like rental homes, raw land and commercial buildings.
Investing in one real estate company holdings is comparable to investing in stocks. Real estate offers investors cash flow three times the national average. Real estate is probably the safest investment in the world as it has almost no risk.
2. You need to learn the Ropes.
Investing in real estate is a lot of work and requires some business ingenuity, financial sense, people savvy and organizational skills. You need to learn about insurance, mortgages and home maintenance as well as the laws that govern such.
3. There may be no returns in the short term.
Property values go up over time and you can count on real estates’ increasing value with inflation rates and yes, you have to consider at least a decade to alleviate transient ups and downs.
The market does expand and contract, so if you are lucky and buy when low, you can do really well when the market adjusts to normal.
It is wise to buy in a more established area at a higher cost, or an area with more potential for growth at low cost. If you buy when the market is high, and its crashes, you can end upside down, but in the long term, no big deal.
The only time you can be concerned with anything upside down is when it’s time to sell otherwise, just keep making the payments as usual.
4. You need a thick skin for real estate.
It is no different from every other business, it can be simple but it isn’t easy. You will always be learning something new in real estate, even if you have been on it for decades.
Real estate can work out, but the truth is, it’s going to take at least a decade on average before you realize much in the value of owning or renting it.
5. There are economic risks in real estate investing.
In a slowing economy and bad market, tenants may not be able to pay their rents. The value of the properties may not appreciate as expected. Every investor should take this into consideration. It is hard to lose money as a landlord. If the market is good and hot, you make money.
When you sell, you can either use the income to acquire more property or pay capital gain. A general investment principle is the higher the expected return of investment, the higher its expected risk. In other words, risk and return are related.
There are many ways to invest in real estate and this includes valuing all four types of real estate: residential real estate, commercial real estate, industrial real estate and the land. To succeed in real estate you must have leads to meet or exceed your goals, else, you will not make much out of it.
In real estate there will be politics and laws. Government may interfere with the land owners’ property laws. Sellers may lose their overall advantage. New real estate and personal finance products will continue to be increasingly digital because of the Millennials.
6. The Real Estate Industry covers many aspects of the property.
The industry covers many aspects of the property such as development, leasing, appraisal, marketing, and management of commercial, residential, agricultural, and industrial properties.
7. The 3 most important things in Real Estate Are:
8. What is the Rule of 5 in real estate investing?
The rule states that a homeowner should expect to spend, on average, around 5% of the value of the home per year, on the costs.. In an ideal situation, Property taxes should not amount to more than 1% of the value of the home
House flipping is for people with significant experience in real estate valuation, marketing, and renovation. House flipping requires capital and the ability to do, or oversee, repairs as needed.
The Bottom Line
Whether real estate investors use their properties to generate rental income, or to bide their time until the perfect selling opportunity arises, it’s possible to build out a robust investment program by paying a relatively small part of a property’s total value upfront. And as with any investment, there is profit and potential within real estate, whether the overall market is up or down.
- Buy a rental property
- Invest in a REIT or other real estate stock
- Participate in a real estate crowdfunding opportunity
- Buy a vacation rental
- House hack your way to a real estate portfolio
- Rent out all or part of your own home
- Fix and flip a house
- Build a new spec home
Moore Creative Realty can help assist you with all of your Real Estate Investing needs.
Call us Today at 727-610-8274