Every New Year real estate experts and financial experts discuss their predictions for the upcoming 12 months in an effort to give people advice on how to make money on real estate. While real estate investments require more than a one-year forecast, it’s helpful in understanding where the market stands and how to use it to your benefit. Rather than focusing on what the next 12 months will look like, there is a more reasonable approach to the topic that experts want you to understand.
You must do your homework
When you are purchasing real estate, it’s vital to do your homework and think about your financial future and retirement in the decision. This would include tasks like evaluating the property to make sure it makes financial sense for you, getting a proper home inspection and keeping the right type of insurance in place for protection. It’s also important to obtain two financing bids to compare your options, HOA documents and to review the title abstract.
Lower Interest Rates
Mortgage rates have been low for a few years and this is a great time to take advantage of it. Purchase real estate now before rates start to go back up.
With the average value appreciation low, you have to remember that real estate is a long-term asset. Transaction costs including purchase cost, renovations, holding period costs, repairs and sales cost, can reduce one’s wealth.
Real estate’s high transaction costs and low appreciation in value means that you probably won’t earn much wealth on your real estate if you don’t own it for at least seven years. Most people don’t truly earn money on a property unless they’ve owned it for 15-30 years.
Finally, remember that if it sounds too good to be true then it probably is. Fixer uppers, great deals and off-market deals tend to never workout for the average real estate buyer. Avoid get-rich schemes and maintain realistic expectations.