Should You Invest in Real Estate Now?
Posted on August 12 By Francine Huff
Mortgage interest remain near historic lows and housing values have dropped significantly over the past couple of years, leading you to wonder if it's time to invest in real estate. That depends upon several factors.
- Do you actually have money to invest in real estate? The days of easy mortgage money are over. If you expect to use a mortgage loan for investment property, you'll need to have an excellent credit score—720 and up—to get the best interest rates. If you have so-so credit you may want to spend some time cleaning up your credit before applying for a mortgage loan. If you're fortunate enough to have a large sum of cash to purchase a property outright, make sure this is really a smart use of your money.
- Do you have unrealistic expectations about flipping an investment property? While it may be fun to watch episodes of "Flip This House" on TV, the fact is that most homes aren't selling very fast these days. There were 679,748 active listings of single-family homes and condos for sale in July, according to ZipRealty, a real-estate brokerage. Many of these property owners have been trying to sell their properties for many months, if not years.
- Do you have a steady income? Even if you plan to rent out your property, it could take months to find a tenant. During that time you'll need a source of income to cover the mortgage payments, taxes, insurance and any maintenance costs.
- Are you ready to be a landlord? This will require you to have good time management and organizational skills. Not only will you have to deal with tenants, but you'll also have to make sure you have a qualified team of people to call upon as needed, such as a handyman, plumber, electrician, etc.
- Do you know why you want to invest in real estate? Ask yourself why you feel real estate is the right plan for you. Do you plan to acquire other properties? Are you interested in residential or commercial real estate? Knowing your motivation for investing in real estate will help you narrow your focus and come up with a workable game plan for buying property.
It's definitely a buyer's market right now. So if you have your finances in order and have researched all that's required to own investment property, now could be a good time for you to begin shopping for a property. But if you're nervous housing prices will continue to fall and dread the thought of getting stuck with a property for too long, you may want to rethink your plans to become a real estate mogul.
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows. Visit her Web sites, www.Huffwrites.com and http://supersavvyspender.blogspot.com/.
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