What to Consider when Investing in Real Estate and The Big WHY
Whether it’s your primary residence, a vacation home, a long term investment property, a rental property or a home you plan to buy, fix and sell again, investing in Real Estate rocks the investment arena for building wealth. Proper planning, preparation and management is invaluable in allowing you to participate in Real Estate investment wealth building whether your plan includes holding, a quick sale or renting.
Ask my 21 year old son and he’ll tell you what his mom thinks about investing in Real Estate. He’ll say, “Yes, mom, I know if you had to do it all over again you’d invest in Real Estate at my age when you got your first job out of college” He’s right, that’s what I preach to him. Two things; contribute to your 401K to the maximum your employer will match of your contributions (that’s free money from your employer and will be the only time you’ll ever get free money from your employer) and buy Real Estate. Start when you’re young to build Real Estate wealth. I only wish my parents issued such wise recommendations to me when I was 21!
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” -Franklin D. Roosevelt
Fair Market Value or Less
So much about investing in Real Estate is purchasing a good property at fair market value, which holds true if you’re buying your first home or investing. This gets you off to a great start. If you’re able to purchase at less than fair market value, this can be even better, however just being able to purchase at bargain basement prices, doesn’t ensure a good, solid investment if you didn’t complete your local market research (discussed below).
Local Market Research Know How
Real Estate will always be local, as what the Real Estate market is doing here in Coral Springs, Florida can certainly differ from other nearby cities of Parkland, Tamarac, Boca Raton and down to Miramar of South Florida, for example. Due diligence is necessary to make sure you’re not simply buying a property at what seems to be a really good price when you later discover that it’s anything but a castle located in a less than desirable area. What area are you targeting? What makes it a good area? What are the trends indicating whether the prices are expected to to do over the time period that you plan on holding the home if it’s going to be your primary residence or a long term buy and hold investment property? Or how has the Real Estate in the area held its value? If it’s going to be a rental property, you want to make sure you’re buying in an area where you can anticipate price appreciations and/or steady demands for rentals. Your reason for purchasing may be for fixing and selling a property; what is the market showing you once you’ve completed your updates to the property? You need to have a Real Estate Agent on your side who knows the local markets to advise you in a neighborhood that you may be targeting. They know what’s selling and for how much and how fast; critical, needed details in order for you to make the right investment decision. Getting to know the local market where you anticipate making a Real Estate investment is a must.
Managing your Real Estate investment
Managing your Real Estate means you must care for and maintain your properties. When you invest your hard enough earned dollars into Real Estate, you’d think it would be important to you to make sure you care for your properties, however it’s amazing how many people let their Real Estate investments fall into disrepair. This care involves keeping on top of all the areas of your home that require maintenance in order to keep in good working condition. Just like a well oiled machine performs at peak condition, the well cared for property will experience less major issues when it remains top of mind and will sell for more money when it’s time to sell your home or property. Such things as tuning your A/C and changing the filters regularly, keeping your major appliances in good working condition, being aware of what begins as minor plumbing leaks that if left untreated can turn a minor leak into a hidden major seeping water issue that can cause a lot of damage. The examples are endless.
The management of your Real Estate will require you to budget for such expenses also. When you address needed issues immediately and not let them fester, it’s almost guaranteed that your costs will be less, keeping more of your hard earned money. Remember that your desire to invest in Real Estate is to realize a profit and to build wealth. Keeping your costs to a minimum allows you to realize greater profits while being able to turn those profits into additional ownership of Real Estate.
Sense of security – The Big Why
With security comes peace of mind. In Real Estate, this security comes in the form of financial security and an overall sense of well being, at ease, when you own Real Estate. Step across your front door threshold, lock the bolt behind you and just say aaahhhh… you’ve made it home, you’re safe, you feel secure. A security many take for granted. When you start to build your Real Estate ownership beyond your own home, and you walk across the front door’s threshold, you now think, wow, I own this property, I’m building wealth. Now, that you’re building wealth, the security that comes from feeling safe and at peace has been amped up by adding financial security to the mix. Not having to worry about where the next dime is going to come from has a tremendous effect on our overall well being. A few less gray hairs. A few less wrinkles. A few less ailments. I’m all for that!