Real estate has long been one of the best ways to build up wealth over time. One of the reasons for this is the simplicity of real estate. You can buy a piece of property, and over any ten year period it will almost assuredly appreciate.
In addition, you can earn income through rents from other people living in the home. Few investment vehicles provide long term growth and short term income. This is why so many investors flock to real estate during a rising market.
However, as the real estate market heats up, there are a lot of people who are noticing a massive increase in housing prices. Although real estate investing can be lucrative, you always need to make sure that you are making the best financial decision.
Finding a property in this real estate market can be tough. There is an old saying in the real estate business, “You make all of your money on the purchase price.” This simply means that the more money you can save on the upfront cost, the better it will be for you over time. Buying a home in the traditional way is perhaps the most expensive way to purchase a property.
If you are just using a service like the MLS or Zillow, everyone else has access to these properties as well. One of the best ways to find a deal is to find an owner who is willing to sell but has not listed their property yet. Many times, you can get the house for a great deal and save a lot of money on closing costs.
Financing is an essential part of buying a home. Few people have the cash to purchase a home outright, so you will probably need some sort of financing with your investment. A lot of people are trying to figure out a way to put as little money down as possible.
Although this may feel better in the short term, it can cause issues over time. In the last housing crash, many people tried this method and lost everything when they could not keep up with the payments. In a low interest rate environment, locking in a fixed interest rate is a great way to save money. There are a lot of ways that you can get creative with your financing plan.
However, the best way is usually just to put the required 20 – 25% down on the property. Oftentimes, putting down a larger down payment is required for homes that you will not be living in. This is a move by the bank to try and reduce their risk of default over time.
In the coming years, many people expect that the real estate market will continue to go up rapidly. If that is the case, you need to be prepared to act quickly. If you can find a great deal in the current market, you need to jump on it. In addition, you may have to look in areas where other people are not looking in order to find a great deal.