Friday, August 20, 2010

Investing in Residential Real Estate: The Way to Finance Your American Dream

by Dario Dingwall

Even in the toughest of economies, people need places to live. The basic need for food and shelter is inherent to human life. And honestly, most of us would like to have a nice single family home to come home to. Residential real investing can not only be a good investment, but done correctly can be very profitable as well.

Investing in residential real estate does not necessarily require one to be a financial intellect, although being a genius can be helpful in other markets. What this investment requires is for one to be keen and have common sense as well as knowledge of what the local real estate market is able to handle. Is the area you are interested in ready to bounce back or is it struggling? Has it reached the end or is there another fall out on the way? The fainted hearted or the very cautious people cannot handle real estate for residential investment.

The first key to good residential real estate investing is simple: invest in property that will actually make money. Not only are single family homes in the low to mid price ranges good to consider, as is an apartment or condo unit. Don't overextend yourself however, especially if there is no guarantee that you will be able to move anybody into your newly opened rental. Look around at how many open properties are in the area in the same price or size range.

The next key to keep in mind is to consider what a realistic return will be when contemplating residential real estate investing. Do not purchase properties with a mortgage that you will never be able to recover. Charging the wrong amount for a rental is just that: wrong. You will never get anyone into the unit for a price above the current standard, no matter what extravagant upgrades you add.

Another fact about investing in residential real estate that makes it so attractive to investors is the fact that even though your mortgage price for the property will remain constant for the loan term period, with inflation you should expect the amount on that real estate property from rent to increase.

When venturing into the investment of residential properties for the first time, you need to know the necessary upgrades as well as those that will be essential for potentially boosting the equity of the property. For novice real estate investors, it is recommended you start small till you clearly comprehend the workings of the residential real estate industry.

It is also important to put the area that you are interested in into consideration before implementing any real estate investment plans. Is the employment situation good or bad? Does the immediate neighborhood have any jobs openings? Is there anything attractive like good schools and recreational facilities that would lure people to keep on living in that area while they commute to their new jobs that are located further away from the neighborhood?

Finally, before you go ahead with real estate investing plans, make sure that you to consider the property maintenance costs. Despite the fact that the home is rented out to tenants, the maintenance cost of that home is still your responsibility plus all the taxes and any other related costs of the property. There are some renters who take good care of the homes but others think of rentals as nothing but four walls that are meant to only provide them warmth.

Real estate investing is not without its risks of course, but in the hands of the right investor, with the right property, it can actually be a way to bring in steady income. Once the property is paid down sufficiently, the extra income can be siphoned off and used to increase the amount of real estate investing that you own.

About the Author:

Dario Dingwall, an international real estate investor for a number of years has performed an in depth analysis on residential real estate markets in America, identifying the top 20. For the first 100 people, his company is offering our readers a report on one such high-yield residential real estate investment market, for free. Get yours by visiting his companys real estate investment website.

Source: You Can Build a Fortune Investing in Residential Real Estate


Matthew Neer said...

Hey there Robert, Real Estate can be sort of tough right now due to the overflow of short sales in the marketplace. You gotta be on top of your game to make some good money.

DebtFreeGuy said...

Thx. for the comment. It is still a buyers market though; and it lloks like it will be for some time to come.