Time to Invest In Real Estate?

Are you getting tired of hearing on the news or reading in the papers how your house value is going down? The media is correct that home values in some parts of Atlanta have seen a decline in the past year. The issues with the mortgage market have not helped matters with the tightening of loan guidelines and increases to jumbo rates. Now that the perception is that every house is a deal/steal, people are lining up to be real estate investors. Before you jump into the real estate game, be sure to consider the risks.

Having long-term success at real estate investing requires a lot of work and local market knowledge. There is money to be made, but one must become an expert and do lots of market research before jumping in. If you are ready to make the plunge, start reading everything you can about real estate investing. There are also many real estate investment clubs that you can join to exchange ideas and learn what other successful investors have done. To find contact information, try the website for the National Real Estate Investors Association www.nationalreia.com.

You will also need to find a local real-estate agent who specializes in investment properties. This is a specialization that takes a great deal of focus by the real estate agent to be a true expert. Most agents focus on either listings or helping buyers find a home to live in. Finding a good home for an investment property requires a different skill set and knowledge base. You will be looking to your agent for guidance on expected rent levels for specific neighborhoods and on what qualities make a good investment property.

Often, however, the only way to learn is from experience, especially since many of the people you'll be contacting won't necessarily have your best interests at heart. Books will preach get-rich-quick strategies and seminars will promise huge returns, but there's nothing like putting your own hard-earned money on the line to learn the risks and rewards of owning a house or condo.

If you don't already own a home yourself, you'd be smart to buy one. You'll learn a lot about the mortgage process and the economics of owning real estate, and you can always rent it out later once you've learned more. Once you are ready to start buying more properties, you’ll need to do some serious thinking about what kind of investor you want to be. If you are a handy man, then you may want to buy homes that need fixing up, increasing the homes value in the process. If you don’t have the skill or vision required to be successful at adding value through improvements, then you may want to stick to the long term rental approach. The market that we are in is going to have opportunities to buy homes that are undervalued that can be flipped when the pendulum swings to a sellers market.

The subprime mortgage debacle has eliminated loan options for many potential homebuyers forcing them into the rental market. The demand for rental properties has increased and will continue until the secondary market develops loan products open up options to these buyers. Due to the fundamentals of economics, the higher demand will put pressure on rent rates to increase unless enough new rental properties are added to the equation.
Whatever you do, though, don't do it lightly. Buying and selling real estate without doing a lot of homework is like walking in a casino without knowing how to play cards. The more work that you do upfront; the better you will improve your odds to come out ahead.