April 2007 – Many people resist investing in what could be their greatest source of income and financial stability because they simply do not understand how to start investing in real estate or they mistakenly think that they cannot possibly start investing in real estate unless they have a lot of money to invest.
Throughout history, landowners have been the wealthiest people in any society. Most financial planners agree that the best step you can take toward building wealth is to stop renting and start owning.
Purchasing property is essentially a straightforward transaction between a seller and a buyer. If you do not have enough cash to purchase the property outright, you seek someone (a bank or other entity or person) to lend you the money to purchase the property, and you pay back in installments. That is basically all of the information you need, but because the transactions involve unfamiliar terms and lots of money, fear takes over.
So if you are asking yourself “What do I need to invest in Real Estate?,” the first thing you need is to study the terms and types of transactions. There are various methods for accomplishing this, ranging from checking a book out of the library for free, to speaking with a licensed real estate agent, to taking a course from someone who has made millions of dollars in real estate.
Some sites even review the different courses or let users send in reviews. While the cost for most courses run in the hundreds of dollars, they could prevent you from making costly mistakes in the future.
To begin, there are some basics that you should know. You will probably work with a mortgage broker or bank to obtain financing for a property. The amount of money that the lender (mortgage broker or bank) gives you to purchase the property is called the “Mortgage.” You should shop around for the mortgage, because there are several variables. These depend on your credit score and history. The variables include term (how long you will take to pay back the loan), interest (everyone who has a credit card should know what this means), and how much downpayment is required (cash that you have to spend).
You will also probably work with a real estate agent, at least for your first deal, and a good agent is worth every cent of his or her fee. An agent can help you determine if the property is reasonably priced for the location/size/condition, identify areas open to negotiation with the seller (price, how long you have to inspect the property, how long you have to obtain financing, etc.), and possibly even suggest other professionals who might be needed (contractors, appraisers, etc.).
You should always do your own homework too. Drive around the neighborhood at different times of the day to see traffic patterns, who the neighbors are, assess the safety and aesthetics. Calculate your payment including mortgage, interest, and insurance. Learn as much as you can from inspectors about the current condition of the roof, plumbing, electrical, etc.
After your first purchase, you will feel much more confident about investing in real estate and may begin to expand your options for financing, you may have to take into account rental property income and expenses, or you may consider buying a vacation property.
If you do not feel comfortable working alone, even with the information gleaned from an online or mail course, there are many Real Estate Investment Clubs or Groups throughout the country, where people who are interested in investing in real estate meet to discuss potential deals and give each other feedback and advice. Quite a few of these groups can be found on Yahoo groups ( www.yahoo.com).
But what it mainly comes down to is what you need to invest in real estate is the courage to follow through when you find a deal that you can transact. You can listen to the advice of professionals, study, calculate numbers, but at some point, you have to sign the contract and take ownership of the property. When that happens, you are well on your way to building wealth through investing in real estate. |
