As Americans, we have the opportunity to pursue our personal happiness and prosperity. For many people this means starting and running a business. There are hundreds of new business ventures formed every day across the country. In fact, experts estimate that there are currently over 25 million small businesses throughout the country generating new jobs and contributing to our economy.
So, “Why invest in real estate?” Real estate investing is one of the easiest ways and historically, has been one of the most successful ways, to achieve financial independence. With a relatively small monetary investment and some sweat equity, it is possible to generate a substantial profit. Take a moment and consider the list of the richest 400 Americans in the world, as composed by Forbes magazine. Literally dozens and dozens of people on this list made their fortune in real estate. We certainly can’t guarantee that one day you’ll be on this list of the richest Americans, but we can teach you some of the principles these fabulously rich men and women used to achieve their wealth.
Real estate investing has a bright future. Real estate in the US has been a solid investment vehicle for many years. Since World War II home prices have increased dramatically in the United States. There have been relatively brief periods in which the price of homes has declined, such as the current period, but over the long run real estate investing has been a very successful and lucrative endeavor for many people.
Purchasing real estate is much more than just finding the right place to call home. In fact, one in four residential homes are bought as an investment property. While being a real estate investor is occasionally stressful, it can also be very financially rewarding.
Investing in real estate has become increasingly profitable over the last fifty years and has become a common investment vehicle, although often misunderstood or underutilized by many. Real estate as an investment takes on many forms from single-family homes to multi-family apartment and condo complexes, or commercial properties including office space, industrial warehouses, and retail space. The investment can be purchased and owned directly, or through various kinds of partnerships and investment trusts.
As we all know, real estate is often discussed in the news media. Frequently there are reports and statistical information pertaining to new home sales or “hot markets” across the country. Reports may show how interest rates affect real estate prices, and other complementary markets such as consumer finance and lending. There is always a great deal of hype in the media when it comes to real estate, and this hype and chatter can come from both reliable and unreliable sources.
Do not get caught up in the chatter from news organizations about real estate values or interest rates. Instead, stay focused on local markets and other markets you may have a specific interest in. Just the same way a home in your neighborhood may be a great buy right now, consider and realize there are thousands of neighborhoods across America with thousands of homes that are just as good of deals as the one in your neighborhood.
Do not let the media “noise” affect your emotions and decision-making, and thereby affect your potential profits. Many investors have gone against the grain and invested in real estate in what the media may refer to as a “less than desirable” area or market, and consequently have made personal fortunes.
Using a stock market analogy, when would you suspect is the best time to buy stock? At a 52 week high? Sometime that can be a successful strategy, but more often you want to buy when a stock is trading well below its actual worth, which is more likely to occur when it is down or in a slump. The same idea applies to real estate. Many people are fearful about buying in a down market for many reasons, but mostly because prices are falling. This is due to the surplus of inventory in the marketplace. When a market is saturated with countless homes or properties for sale, it means that inventories are up. The basics of free market economics apply. When there is a surplus of property on the market, sellers are forced to adjust prices lower to attract potential buyers. This is the law of supply and demand. Buyers will only buy property at a price that they think is reasonable.
With so many houses on the market, home-buyers and investors alike have an historic opportunity to dictate the price they feel is reasonable. This is what is commonly referred to as a buyer’s market. It translates into huge financial upside potential to those who recognize such an opportunity the continuum
