When Should I Invest In Real Estate?

In my opinion, now is the best time. Unlike the stock market, home investment is much less volatile since appreciation is in most cases a guarantee. Of course, there are steps anyone should take before embarking upon a real estate investment venture....

· Know What You Want

Whether first time investor or experienced mogul, it is vital that you evaluate what it is you want to buy and why you are buying it. Are you familiar with the community? Have you familiarized yourself with the demographics specific to this area? Research the real estate market where you would like to invest. A Realtor® specializing in investment property is an excellent resource for answers to questions regarding investment endeavors.

· Can You Afford It?
Before you expedite any transaction, consider the property and its resale factor when investing. What are you willing to spend for the remodeling? For instance, would it be profitable to buy a home requiring updates that could cost you a year's salary? Are the changes you have in mind conducive to creating a more valuable space? For example, if you were to covert a three-bedroom home into a seven-bedroom home we might call this structural obsolescence, in appraisal terms, because the changes made to the structure may cause the home to become less desirable in use or appearance. These modifications would consequently result in a loss of value and income.

Make sure you discuss your financing options with a qualified lender. Lenders typically prefer to work with a 45-55% or lower debt to income ratio. Those with higher debt may discuss with a lender the most frugal ways to decrease their debt. Several loan programs exist that offer the purchase of a home with little or no money down. However, with this option you should expect higher monthly mortgage payments. With this in mind, it may be wise to purchase your investment property with a considerable down payment. Make certain to explore all of your financing options.

According to the Federal Reserve, home sellers averaged a net capital gain of greater than $25,000 in just the last five years. How's that for investing motivation? If investing in real estate is for you, contact a Realtor® to discuss an investment plan that is best for your budget.

Is now the right time to invest in real estate? I have to agree with this well-known investing guru,
"Well, real estate is always good, as far as I'm concerned."- Donald Trump