Whether Or Not To Invest In Real Estate
If you have ever wondered whether or not you should invest in real estate, then this might just help you decide your answer. Regardless of what realtors and real estate investors will tell you, owning real estate takes more time and commitment than just buying stocks and bonds. Ultimately, real estate requires a bit of management that many investors choose to forgo when investing in the stock market, but this is also why the real estate investment market offers higher rates of return.
The first step in deciding whether or not you should invest in real estate is to determine your present situation in a purely mathematical manner. You must determine much money you have, where is it deployed, and what return on investment you've been achieving over the years? You must be able to determine your present situation if you want to make an analytical decision to either invest in real estate or choose not to do so.
Once you establish your current situation, you should then determine an amount of dollars that you would be willing to invest in real estate, and to set a targeted rate of return for it to motivate you to be more involved in your investing. For example, if you have been getting 8% annually in your mutual fund, jumping into real estate for an anticipated return of 9% hardly makes sense. You would be better off staying with what you have than taking on more responsibility for little additional return.
Most real estate investors (not including the large institutional investors who own score of millions of dollars worth of real estate) are able to get better than double their "non real estate" rates of return by using a safe, long-term real estate investing plan. The plan is so simple that you have already heard it many times before ... buy low and sell high!
Investing With Real Estate Market Cycles
This is NOT flipping real estate. It is a buy and hold real estate investment strategy that requires the investor to buy during the "buy cycle" and sell during the "sell cycle."
Right now, we have entered into a real estate buy cycle that will last for several more years, and the anticipated sell cycle will not occur for seven or more years. By purchasing income producing properties, smart investors will most likely earn returns that far exceed their hopes in the stock market. If you have the patience and means to wait for the sell cycle, you should strongly consider investing in real estate.
The first step in deciding whether or not you should invest in real estate is to determine your present situation in a purely mathematical manner. You must determine much money you have, where is it deployed, and what return on investment you've been achieving over the years? You must be able to determine your present situation if you want to make an analytical decision to either invest in real estate or choose not to do so.
Once you establish your current situation, you should then determine an amount of dollars that you would be willing to invest in real estate, and to set a targeted rate of return for it to motivate you to be more involved in your investing. For example, if you have been getting 8% annually in your mutual fund, jumping into real estate for an anticipated return of 9% hardly makes sense. You would be better off staying with what you have than taking on more responsibility for little additional return.
Most real estate investors (not including the large institutional investors who own score of millions of dollars worth of real estate) are able to get better than double their "non real estate" rates of return by using a safe, long-term real estate investing plan. The plan is so simple that you have already heard it many times before ... buy low and sell high!
Investing With Real Estate Market Cycles
This is NOT flipping real estate. It is a buy and hold real estate investment strategy that requires the investor to buy during the "buy cycle" and sell during the "sell cycle."
Right now, we have entered into a real estate buy cycle that will last for several more years, and the anticipated sell cycle will not occur for seven or more years. By purchasing income producing properties, smart investors will most likely earn returns that far exceed their hopes in the stock market. If you have the patience and means to wait for the sell cycle, you should strongly consider investing in real estate.
About the Author:
Joe Manausa, MBA, CRB, CRS, GRI, CRB, CRS is an outspoken advocate for careful investing with a Safe Real Estate Investment Strategy. You can find a complete list of all Tallahassee foreclosures, short sales and reo properties at his Tallahassee real estate website.