Getting Your Bearings in Real-Estate Investment
In the recent past, people have been jumping on the real estate investment bandwagon. Before you follow suit, you should be sure that you are deciding to invest in real estate for the right reasons. Given a good knowledge of real estate investment pros and cons, your investment is sure to be a good one, but only if you are investing with the right reasons in mind.
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Know the difference between real estate investing and speculating. The former involves purchasing a piece of real estate with the intention to collect income from rent. The latter is purchasing a piece of real estate with the expectation that its value will increase over time. Undoubtedly, investment in real estate is much safer and far less risky than speculating in real estate--while many believe that property values will always rise over time, this is not always so
If you are looking for a real estate investment in the true sense, begin close to home by investing in residential real estate--if you already own a home or two, then you have some experience in this sector already. When looking to purchase additional residential real estate with the intent to rent, ask the seller for a copy of his Schedule E tax form, which will give you a real idea of what you can expect to earn from your real estate investment.
Finally, some experts have suggested that the old real estate maxim stating that "the most important factors in real estate investment are location, location, and location" might, in fact, be unjustified. The numbers suggest that there might be more profit in undesirable locations as up-and-coming urban neighborhoods offer relatively cheap real estate but can attract top-paying tenants looking to get in early. This type of development is commonly referred to as "gentrification."
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