November 19th, 2008 — Investing, Long Term, Money, Personal Finance, Real Estate
Right now, if there was a market that had bad news written all over it, it would be real estate. The housing crisis has made investors jumpy, the economy appears to be tanking and home values are plummeting across the country. Would you believe that this is actually a good time to get into real estate? With the proper choices and management, this is absolutely true.
Down markets are a speculator’s dream come true and they can easily change your entire fortune. While we certainly don’t recommend sinking your life’s savings into a bunch of dead end properties this instant, this is a good time to think about investing in real estate the smart way. Never overextend yourself and always take the time to make smart investments that will pay off in the long term.
Let’s look at that statement a little more closely, especially the last two words – long term. Yes, right now, an investment in real estate is not going to do very well. In fact, it may even lose some value over the next few months. But, what goes down will go back up. Property values cannot stay low forever, and although they may not reach the insane heights they recently attained, it’s easy to make a good chunk of money with the right house.
Instead of looking at an investment in real estate in the tangible form, let’s compare it to an investment in a stock. You purchase a stock at $4 today and while it’s been steadily going up over the past few years, it’s still a pretty cheap buy. However, in eight months, the company takes off and the value of your stock increases exponentially. This would be considered a good investment. How is investing in real estate right now any different?
In fact, in some ways, you can do quite well with an investment in real estate right now. Consider the fact that foreclosures are at an all time high. What does this mean? Thousands of families need a place to live and they’re not going to be able to get a new home loan right away. This means that thousands of new renters have flooded the market and they have to find a house to rent.
Investing in real estate is always risky, but sometimes, the best returns come from taking a chance in a down market. You can easily pick up a property for pennies on the dollar, earn money from renting it out right now until the market changes and then sell it for a profit in a few years.
Remember – if you are going to jump into the real estate market, never purchase a property without first getting an inspection. Some homes that have been foreclosed on will be wrecked by the old owner or may have fallen into disrepair. Never accept anything on face value and insist on seeing the property in person. Pick properties that are solid, located in good neighborhoods and likely to go up back in value once this crisis passes.
Photo Credits: 1
Related Articles
Related Stores
November 3rd, 2008 — Money, Personal Finance, Real Estate
The housing market has many people concerned right now and one of the most popular questions is whether or not this is a good time to buy a home. Unfortunately, there is no clear cut answer to this question, and each individual’s financial state will determine the answer. However, there are a few guidelines you can follow.
First Time Buyers
Right now, many experts are recommending that if you have great credit this is a good time to get a house, thanks in a large part to falling values and lowered prices. However, keep in mind that bank approvals will not be easy to get and appraisal values may drop even during the process. For those that are not quite ready to make that leap, or for those that cannot get an approval right now, renting is the best option, especially if you can save up enough money to increase your overall down payment.
Those Facing Foreclosure
If you are among the thousands that are facing foreclosure right now, and you are considering selling your home to buy another, the answer is definitely uncertain. The chances of getting a new home loan are slim to none, and as such, for many in this position, renting may be the only answer. However, to further complicate matters, landlords are increasingly relying on credit scores to determine whether or not they want to rent a property.
If your credit has already been affected by a foreclosure, renting may also be nearly impossible. It is best to move quickly in this situation, before your credit will be dragged down even further.
Existing Homeowners
If you are looking to sell your home in this down market, it may be best to hold tight and wait for the housing market to improve. The chances of getting the full value of your home are small, and buyers are finding it difficult to get a home loan right now. If you are not at risk for foreclosure, this is a good time to start making improvements to your home that will increase its overall value.
For those desperate to sell in order to get out from under higher interest rates, a short sale may be necessary. If you are comfortable losing equity in your home and would rather sell than face foreclosure, this may be your only option. It is best to work with a realtor in this situation since they will have the resources available to help you locate buyers in less time.
The rental market is booming throughout the country and in many larger cities, it is getting more difficult to find a property. If you think you will be in the rental market soon, it is best to start looking right away in order to secure your property. For those that have truly no options at this time, it may be necessary to move in with family members or get assistance until you can turn your finances around.
Photo Credit: 1
Related Articles
Related Stores
July 22nd, 2008 — Debt, Money, Personal Finance, bad debt, credit cards
The average American is currently carrying at least some form of debt, even if it is small. We live in a society where overspending is common and credit card debt has become a right of passage. In many cases, you need to be in debt in order to start building your credit history. Without this, it is hard to get a house or even a car. But the question is – how much debt is too much?
When you are first starting out, you may have a lot of student loans and this further compounds the problem. Ideally, the average person should limit their debt to three times their currently monthly salary. However, this may not be possible in many situations. There are some things that we cannot help but go into debt for, such as a car or school, but there are certain kinds of debt that you can avoid.
The key is figuring out the difference between good debt and bad debt. Good debt is hard to have too much of in most cases, especially if you are putting it to work for you. Bad debt is very easy to rack up, and can be hard to pay off. This should be the smallest part of your debts. So, what is good debt and what is bad debt?
Good debt is money that you spend on something that will give you some sort of return. For example, your student loans are good debt, since they were used to further your education and help you earn a larger salary. A car loan straddles the fence, but it is a necessity, so for the sake of argument, we’ll put this in the good debt column. A home loan is also a good debt as long as you do not overbuy.
Bad debt is debt that does nothing but cost you money. Credit card debt is the best example of this, especially when your cards are used to purchase non essentials. You can look at bad debt as something that will never have any sort of return. A $400 shirt may look nice, but it’s never going to do anything but cost you more money, ie: dry cleaning. In fact, there’s a huge risk that it will even end up being ruined and all that money will go out the door.
It is also important to remove emotional attachment from the concept of bad debt. It is easy to say, but I love that shirt and I wear it all the time. The bottom line is, it is doing nothing for your bottom line, and as such, it is bad debt.
Good debt also includes what is known as leveraged debt. This is a type of debt that you use to create another income stream. Examples of this include investments or dividends that are constantly paying you back. This kind of debt is very good indeed and will only serve to enrich you. While you should never get in over your head with any kind of debt, good debt is a lot easier to handle.
Photo Credits: 1
Related Articles
Related Stores
