Why Invest in Real Estate?

Real Estate Agent with Golden Eagle Properties

You know you've thought about investing in real estate, come on admit it.  Even if it was a wishful little passing fantasy about buying that that rundown bank owned home you drove by, because all it really needs is a good cleaning, a little paint, and presto you can sell it for a hefty profit.  Or perhaps you've considered purchasing income property that 'cash flows' that is can be rented for an amount that will cover your mortgage. So, why invest in real estate?  You've already considered part of the answer, there's fantastic profit potential in real estate investment.

Real estate investment continues to be a proven method of making money and increasing net worth, with a few caveats. Your profit will depend on your knowledge, your hard work and your ability to create a plan.  Real estate investment has no magic formula.  No matter how easy the late night millionaire's infomercials make it seem, it is not, and cannot be thought of as a get rich quick scheme.  It could take several months until you buy your first property, another year or more before you can sell one, and even longer then that before you're able to realize a comfortable and consistent income. 

So why invest in real estate?  Simply put, although this requires a serious commitment from you, there is a potential for profit whose only real limits are those you impose on yourself, and that's how you must to treat it.  This means that you are the one who controls just how much you are going to make.  You will control your profits only by learning everything you can about investing and real estate, studying loan structures and foreclosure laws, understanding the psychology of buying and selling, knowing the rules and responsibilities of owning rental property.

If you know what you're doing, you are virtually guaranteed to make money.  Unlike most other investments, there is one thing you can count on with real estate.  You will eventually turn a profit on practically every property you own, as long as you paid a reasonable amount for it.  Real estate values rise and fall with the economy.  If real estate prices drop (as they have been recently), you can count on the fact that eventually they are going to rise again.

If you've invested in rental properties, you will be able count on a steady income stream, so long as they are kept in good repair.  Here's another real estate truth; people are always going to need a place to live.  There is always a demand for the commodity you are offering.  And as we have recently seen, even in the toughest markets, rental prices seldom drop by more then a small amount.  As long as you can keep your rental units full of paying tenants, you can continue to count on the income you'll receive to cover the maintenance and mortgage costs and realize a profit.

The bottom line this.  Real estate is one of the few investments that have time-tested proof of profitability.  If you remove all the hype and get rich quick promises, you'll find this basic core of truth:  people do make money buying and selling real estate. And that, after all, is the best reason to invest in anything.

Right now the competition between sellers in the Inland Empire and North San Diego County is intense.  Two years ago it was the residential homeowner who set the price, but as new homebuilders started to see an increase in their inventory they began to offer discounts and toward the end of last year began to set the price.  Now the banks with the massive inventory of foreclosures they've been forced to dispose of are now willing to entertain almost any offer brought to the table, this has caused everyone else follow suit.

Over the past couple months there have been other forces, which have come into play that even now are acting to stabilize the market.  The Fed's continuous drops in the prime and overnight rates have served to bring more buyers into the market, and even though the lending rates are more tied to the bond market and should be going up; they are not (perception can in and of itself be a very powerful force).  The President, Congress and many States have gotten involved, and the Financial institutions have thinned down to more "stable players" who have maintained or established good liquidity while increasing the bar on who gets loans and what types of loans they can qualify for. Banks have also been willing to foster "work out" strategies with those currently in distress.  Meanwhile almost all other sectors of the economy continue to show modest growth.  The stock markets during this period have continued to be volital, making them an increcingly risky place to invest.

All this has prompted investors to start looking to diversify their portfolios once again with real estate.  As more buyers come back into the real estate market, prices are beginning to stabilize.  Eventually these buyers will start "buying down" the existing inventory and prices will once again begin to rise.

The good news?  Interest rates remain low; there are still many flexible lending options available.  There continue to be more properties to choose from in more areas then we have perhaps ever seen or will see again for many years to come.  Give us a call today so we can help to get you started on /or enhance your path toward building more equity and personal wealth, this is indeed the perfect time to invest in real estate!

Chris Styner
(800) 763-7154

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