Many of the richest people in the world started out in real estate.
What are some essential things you should know before jumping into real estate?
Understand that investing in any real estate market is always risk. The question you need to ask yourself prior to investing in real estate is "how much of a risk am I willing to take?". Knowing these key factors can lessen the risk.
Know how market timing works. This means research how market cycles work. Markets go up and down in different stages. You need to watch the market so you can determine when to get in at the right time. A lot of successful investors aren't looking for a quick buy and flip. They buy when the market is low and sell when it is high.
Know how to analyze real estate numbers. You have to be able to identify all of the factors that are affecting your profit.
The four major parts of real estate investing: cash flow, appreciation, loan reduction and tax benefits. The four factors work together to produce a rate of return.
Real estate isn't necessarily losing money when it depreciates.
Last but not least, know the economics in your area. Look beyond the growth of the neighborhood you are investing in to the overall health of the city, state and country. For example, if interest rates are rising, you need to understand that borrowers are being excluded out of the market. The six aspects of economics are: mortgage interest rates, affordability indices, supply and demand, demographic information, real estate and the job market.