So, You're a Real Estate Property Investor
You think you're on to something with your approach to real-estate investing? Could it be a full-time job and make you a ton of dough? I've seen some do very well with it and I've seen some crash and burn. So, here's some advice and some trends I see coming down the pike that you can take to heart or take with a grain of salt. For three ways to go broke in Real Estate see; http://moneycentral.msn.com/content/Investing/Realestate/P125117.asp Also see; http://beginnersinvest.about.com/od/realestate/index.htm?terms=Real+Estate+Investing
Turnover, Leases and Equity
First, as you may know, the house you live in is not an investment. But, Property that can be turned-over quickly or leased-out is an investment. The turnover variety carries more risk because there is no guarantee of selling property once acquired. Whereas, the rental variety is safer if you buy in an area where it is easy to find reliable tenants.
Areas that have good tenants are usually in and around college towns and universities because students will pay top dollar for very little living space. Students are, by and large, well financed by others who can afford to foot the bills. Other areas for good for tenants are inside and surrounding larger cities where office workers commute to work. Some workers tire of the commute and look for something closer to work, they are usually gainfully employed, and dependable. You get the drift, as they say in real estate; the three most important things are location, location and location. ( I won't go into the mechanics of lease-agreements and carrying insurance).
That is not to say that you could turnover some property as well as lease it. The thing is, over time, as you acquire more and more property and build up equity in your holdings you can use that as leverage to acquire yet more property. Patience is a virtue and this can take years. Too many have tried to acquire property too quickly and find themselves in a negative cash-flow position, (your out-go is more that your in-go). But with patience and careful consideration as to what and why you are acquiring property you could eventually build up enough equity to build an attractive apartment complex or maybe an office building someday. Now, are we talking real income property?
Trends, ARMS and No-Interest Loans
These days are the days of the stretched consumer. I don't have to tell you about rising energy prices and the like. The savings rate, (as a percentage of income), hit a possible 75 year low at -1.5% in September. Yes, that's a negative 1.5%. What does this mean besides people are spending more than they make? Consumers have very little, if any, income to buy property with rising housing prices. Housing affordability is at a 14-year low according Merrill Lynch economists and mortgage applications are 20% below this last summer's high. On top of that, by January 2006, the FDIC and like governing bodies are looking to clamp-down on the creative risky mortgage loans we see as popular lately. Interest-only and ARM borrowers are in for a rude surprise when their payments increase as loans reset and they start paying principal payments and interest rate increases. Most of these types of loans are slated to have increased mortgage payments of 50% to 100% in the next five to six years.
Then what?
Well, if you're an investor it could be foreclosure heaven. Look for an over-abundance of housing on the market during this time period. Economically, over-supply means price reduction. The scale will tip and buyers will have the upper negotiating hand. For more inforamtion on foreclosures see; http://homebuying.about.com/od/realestateforeclosures/index.htm?terms=Real+Estate
The main idea is to be able to ride out the up and down trends that are inevitable in real-estate with larger holdings in income-producing property and the accompanying equity that comes with it.
Good luck out there. http://ednewcomb.blogspot.com/
You think you're on to something with your approach to real-estate investing? Could it be a full-time job and make you a ton of dough? I've seen some do very well with it and I've seen some crash and burn. So, here's some advice and some trends I see coming down the pike that you can take to heart or take with a grain of salt. For three ways to go broke in Real Estate see; http://moneycentral.msn.com/content/Investing/Realestate/P125117.asp Also see; http://beginnersinvest.about.com/od/realestate/index.htm?terms=Real+Estate+Investing
Turnover, Leases and Equity
First, as you may know, the house you live in is not an investment. But, Property that can be turned-over quickly or leased-out is an investment. The turnover variety carries more risk because there is no guarantee of selling property once acquired. Whereas, the rental variety is safer if you buy in an area where it is easy to find reliable tenants.
Areas that have good tenants are usually in and around college towns and universities because students will pay top dollar for very little living space. Students are, by and large, well financed by others who can afford to foot the bills. Other areas for good for tenants are inside and surrounding larger cities where office workers commute to work. Some workers tire of the commute and look for something closer to work, they are usually gainfully employed, and dependable. You get the drift, as they say in real estate; the three most important things are location, location and location. ( I won't go into the mechanics of lease-agreements and carrying insurance).
That is not to say that you could turnover some property as well as lease it. The thing is, over time, as you acquire more and more property and build up equity in your holdings you can use that as leverage to acquire yet more property. Patience is a virtue and this can take years. Too many have tried to acquire property too quickly and find themselves in a negative cash-flow position, (your out-go is more that your in-go). But with patience and careful consideration as to what and why you are acquiring property you could eventually build up enough equity to build an attractive apartment complex or maybe an office building someday. Now, are we talking real income property?
Trends, ARMS and No-Interest Loans
These days are the days of the stretched consumer. I don't have to tell you about rising energy prices and the like. The savings rate, (as a percentage of income), hit a possible 75 year low at -1.5% in September. Yes, that's a negative 1.5%. What does this mean besides people are spending more than they make? Consumers have very little, if any, income to buy property with rising housing prices. Housing affordability is at a 14-year low according Merrill Lynch economists and mortgage applications are 20% below this last summer's high. On top of that, by January 2006, the FDIC and like governing bodies are looking to clamp-down on the creative risky mortgage loans we see as popular lately. Interest-only and ARM borrowers are in for a rude surprise when their payments increase as loans reset and they start paying principal payments and interest rate increases. Most of these types of loans are slated to have increased mortgage payments of 50% to 100% in the next five to six years.
Then what?
Well, if you're an investor it could be foreclosure heaven. Look for an over-abundance of housing on the market during this time period. Economically, over-supply means price reduction. The scale will tip and buyers will have the upper negotiating hand. For more inforamtion on foreclosures see; http://homebuying.about.com/od/realestateforeclosures/index.htm?terms=Real+Estate
The main idea is to be able to ride out the up and down trends that are inevitable in real-estate with larger holdings in income-producing property and the accompanying equity that comes with it.
Good luck out there. http://ednewcomb.blogspot.com/
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