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Beginner's Real Estate Investing Guide: Single
Family Homes (SFH)
By Jeanette Joy Fisher
Are you afraid to Invest
in Real Estate?
Are you afraid to take the plunge and invest in real
estate? Perhaps you've seen others make a fortune in
real estate but you're not sure how to take the steps to
ensure that you make money instead of lose money. Recent
uncertainties in the market may even cause you to sit
back and wait.
Making a mistake in a real estate investment can be
costly--or even disastrous. However, there are ways to
ensure that you make money investing in real estate. The
key is to learn as much as you can before you attempt to
buy property. Whoever said "knowledge is power" knew
what they were talking about when it comes to buying and
selling real estate. Here are a few tips on how you can
make a wise investment decision:
Stick with Proven Money-Making Investments
If you're not a gambler, it's best to stick to investing
in tried-and-true single family homes. There's always a
market for single family homes once you've fixed them up
and are ready to resell. If you plan to rent your
investment property out, single family homes are the
easiest homes to rent, assuming they're not too
expensive.
Prepare Your Finances First
Get your mortgage financing arranged before you go house
hunting. This essential step prepares you to make offers
with a fast closing. Distressed sellers feel pressure to
close as soon as possible. Quick action gives you an
edge over any competition you might have when it comes
to making offers on properties.
Educate Yourself
Become an expert in a particular area and type of home.
That way, you'll eventually get good enough at knowing
what homes are selling for so that you can make your
offers quickly and as accurately as possible.
Know Area Employment Conditions
Watch local employment trends. You must be able to rent
your investment home or sell it right away. When people
have jobs, they can afford housing.
When you look for properties, either avoid altogether or
be very cautious if the area's economy is largely based
on just one employer. If that employer shuts down or
cuts back drastically, that entire area's real estate
market will be dramatically affected and you could get
burned.
One exception to that rule would be a town that is home
to a large, old, and well-established university. Such
an establishment will have a steadying effect on the
community that surrounds it, and there will always be a
need for the many employees and students who are
associated with the university.
Guard Your Money
Always maintain a reserve fund, because unexpected
things will come up as you go through the rehab process;
that's just part of the investment game. If having to
pay for a new roof will mean that you can't pay your own
home mortgage that month, you're financially
over-extended. You must make sure that an unexpected
expense isn't going to jeopardize your future.
Know how much your profit potential will be before you
make an offer. You should know how much the needed
repairs will cost. Although we've just established that
things will come up that you can't predict, you should
know what the house will sell for before you make any
kind of an offer. That way, you can build in a cushion
that will assure you of making a profit, even when the
unexpected takes place.
Plan Ahead and Act Quickly
Get through the rehab process as quickly as you can.
That way, you won't be surprised if the local economy
takes a downturn later on. You know what the economy and
market are like at the time of purchase, and you want to
be able to sell under essentially the same conditions.
That will take a big load off your mind.
Educate yourself so that you feel confident instead of
afraid. Remember, more multimillionaires made their
money investing in real estate than by any other method.
Copyright © 2006 Jeanette J. Fisher
This is the forth in a series "Real Estate Investing Guide."
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