Who Should Invest In Real Estate? Brad Amidon

Who Should Invest In Woburn Real Estate?

Many people now agree that real estate markets have begun to return. Existing home prices are up and just as interesting, investors were at the closing table in 19 percent of all transactions in November and December.

But if a lot of people are investing in real estate what about you? Should you be a real estate investor?

There's no right answer but there are five major questions, which every potential investor should ask:

First, what's the story with your local market? Real estate is a localized commodity so while home values may be going up nationwide or in other areas, what counts is the real estate market where you have an investing interest. How does real estate activity - home sales, prices, discounts, etc. - look in your community?

Second, how will you finance a purchase? There is investment financing available for qualified borrowers but in today's market many investors simply skip the lending process and buy for cash. November existing sales were cash, but beyond acquisition money do you have reserves to cover such costs as maintenance, repairs, taxes, insurance and vacancies?

Third, where are mortgage rates? The general rule is the lower the better. Fortunately, 2012 saw the lowest mortgage rates in decades, rates, which continued into the start of 2013. Whether such rates will be available in the future is unknown, but low rates have two values: They allow investors to more-readily fund acquisitions and they make it easier for would-be purchasers to buy properties owned by investors.

Fourth, what are the rules? It may seem antiquated but rent control continues to exist in some jurisdictions. Other areas license rental units and when leasing there are important disclosures which must be made. In terms of taxes, real estate continues to be one of the best shelters available with advantageous rules regarding such write-offs as depreciation and capital gains.

Fifth, what are local community trends? It's good for investors when local populations are growing, unemployment is declining, rental rates are raising and vacancy levels are falling.

Real estate investment has been a path toward security, income and wealth for many households but there is risk and no investment is a sure thing. For more information and to learn more about when investing is right for you, contact your local Atlantic & Pacific Real Estate sales professional.