Buying Investment Property
May 8, 2012 Real Estate
Investing in real estate is not a new path to financial success. It is a well worn path and it is so well worn because it is such an effective way to make a great deal of money in a relatively short period of time. But you have to be a forward thinker to make any serious money in the buying and selling of real estate.
The objective is to buy low and sell high and that means that you have to make a guess (an EDUCATED guess) as to what is GOING to happen tomorrow or next week or next year or ten years from now and not base your decisions on what happened yesterday, or last week, or last year or ten years ago.
Think about the neighborhood that you grew up in. Your mom and dad bought the house when the subdivision was new. It isn’t new anymore. It isn’t on its way UP. It is on its way DOWN.
The residents and the buildings are all beginning to show their age. That is the nature of real estate. What goes up will eventually go down. You always want to buy when the area is on the rise and not when it is in decline. There are, of course, exceptions to this rule but there aren’t many.
In short; you need to find the hot markets when buying investment property and in a nutshell the hot market is where the people are GOING. Determining where people are going is the trick.
Buying in an area that is already popular can be a hot market providing you can make a good deal on the property but finding out about upcoming changes in the infrastructure can lead you to where people will be going in the future.
Infrastructure changes are such things as major highway construction, marinas or entertainment facilities. Basically, you base your real estate market investments upon the cold hard facts and not what you hope will happen or what your barber tells you.
Right now isn’t a great time to invest in real estate in the USA but there are hot properties overseas that you can take full advantage of while you wait for the US real estate market to recover. Costa Rica is a good example.
Costa Rica is only 3 hours from the mainland. It is a hugely popular vacation destination and beach front property has been on an upward spiral for several years but it appears that the trend is going to continue.
Real estate investing is not an exact science. You always have to weigh the risk against the potential reward and if you do decide to invest in overseas property it is wise to employ a local attorney to oversee the process.
Then there is always the ‘cool’ factor that shouldn’t be overlooked when searching for hot investment real estate. For example: in California there is an area called ‘the Venice Beach’ area. There was a film made there a few years ago that was loaded with skate boarders and surfers. Suddenly, Venice Beach became a very ‘cool’ place to live and real estate prices soared! So don’t overlook ‘cool’.
Keep both eyes on large corporation expansion plans. When corporations build, expand or even relocate the real estate market will boom simply because of demand for housing and small businesses. If a Wal-Mart is going to be built in a town, can a McDonald’s be far behind? And all of those people who will be coming in to run Wal-Mart and all of the small businesses that it spawns will need housing.
Yes! Business can cause real estate prices to go up and can create hot properties for investment purposes!
Remember that old song that Willie Nelson recorded, “You have to know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run”. Although the song was about gambling the advice is solid for investing in real estate.
Choosing what properties to invest in should be made strictly upon solid facts. A building permit for a marina is solid proof that a marina is going to be built and that the adjacent property values are going to go up.
Your cousin telling you that he HEARD that a marina was going to be built is NOT a fact. It’s hearsay and you shouldn’t bet a lot on hearsay! Investing in real estate is an excellent way to get a very high return but you really do need to know what you are doing to keep from losing your shirt.