The good news is housing prices have increased more than 10% on average in some pockets of the country, mainly the big costal cities. This is partly due to the low mortgage rates and tightening inventories. According to GoBankingRates, certain inland cities too saw a huge growth. For example, Buffalo, NY posted a growth of 34.6 percent, Atlanta, GA by 24.54 percent and Cincinnati, OH by 20.6 percent.
If you are wondering whether it is worthwhile to invest in real estate, the time is now, since the real estate market is set to grow.
Are you up for real estate investment?
These tips may help:
- Be realistic: You will need to be financially strong, if you want to venture into investing in commercial real estate. However, for newbies the best bet would be to go for residential real estate.
- Consider your financial situation: Besides your own savings, calculate how much loan will be required and your repayment capacity. You can take the help of a financial planner for a sound financial strategy.
- Don’t rush in: As a first timer, it is best not to invest in more than one property. This way, you will remain focused on that property and not get distracted by others. Also, you will get the opportunity to learn from your mistakes, without losing much.
- Go by a plan of action: Following a plan of action will not only help you in narrowing down your search for potential properties, but also help you decide as to what to do with the acquired property – renovate it, rent it out or turn it into commercial space.
- Keep an ear to the ground: Real estate market fluctuates, so invest when the property rates are rising. This way you can compel the buyers to purchase your property before the market rates further increase. A real estate agent or a professional can guide you regarding market trends.
How to go about investing in real estate?
In case you are not in a position to buy physical property, you can still become a real estate investor! Here’s how:
1. Investing in home construction
What makes this investment so attractive is the boom that construction of new homes is currently experiencing and will continue to do so over the next few decades. Homebuilders, such as LGI Homes, Pulte Homes, DR Horton and Lennar are into developing new neighborhoods and rehabilitating the old ones. In fact, Sunnyrealty, a leading Miami real estate firm, suggests now may be a good time to buy in.
2. Investing in real estate ETF
ETF or Exchange-Traded Fund is nothing but holding stocks and bonds in a single fund. This is akin to index funds and mutual funds. Investing in ETF comes in handy, if you want to both diversify and also invest in real estate. There are several real estate ETFs, such as Vanguard’s VNQ, IYR and the like, that invest in stocks issued by REIT that are into purchasing office buildings, restaurants, etc.
3. Investing in real estate mutual funds
You can go in for real estate MF, such as DFREX that offers low costs and is supported by top economists. You can also go in for TIREX, another real estate MF that not only boasts of low fees, but also of its $1.9 billion assets and real estate holdings.
4. Investing in REITs
REIT is a firm that owns, manages or finances income-generating real estate. It is as good as investing in ETFs and mutual funds, since no holding of physical property is required. REIT is ideal for the diversification with other types of equities. However, steer clear of non-traded REITs.
5. Investing in a company focusing on real estate
Many companies involved in real estate do not operate as a REIT. However, they may give a reduced dividend compared to a REIT. Such companies may include hotels, resorts, timeshare companies and the like. Investing in these makes sense, if you need exposure to a particular type of real estate asset. However, due diligence is required before buying the stocks in individual companies.
6. Investing in real estate notes
This investment allows you to buy real estate notes without having to deal with physical real estate. It basically means buying debt at prices below what a retail investor would pay. However, it is important to understand what you are investing in.
7. Investing online in real estate
Online real estate investment has come as a breath of fresh air for investors like you. Several websites, such as Fundrise and RealtyShares allow you to invest into commercial or residential real estate investments, in return for cash flow distributions. And you don’t even have to be an accredited investor to open an account.
If you are able to invest in the right place, at the right time and at the best price, success will come knocking at your door. For this to happen, thorough research, excellent strategizing of investments and timely seizing of opportunities is a must.