All about investment

by: Monique Fell

There is always a risk when investing in real estate because property values rise and fall. The best protection you can have against this risk is to become knowledgeable of the market you intend to invest in. If you do this, you will be able to buy properties that are undervalued, improve them if necessary and sell at market rates. The more properties you can turn over using this simple formula, the more profit you will reap from your real estate investment strategies.

The two main ways you can buy properties at low prices with a promise of selling much higher, is to buy individual properties that are being sold significantly below their market value and to buy when the real estate market as a whole has bottomed out and is ready to rise. Both these strategies require you to do your research about the market in general and market values of comparative properties in particular.

Before investing in a local market, spend some time researching it. What are the current prices? What has been the market growth over the past twelve months? How has the population grown over the past twelve months? Are these trends likely to continue? You also need to research current and future development plans and assess their likely impact on future prices and market demand. For example, if there are a number of major development projects for apartment complexes that will be available for sale at the same time you will be selling an apartment you may have to lower your asking price in order to make a sale.

The real estate market should not be viewed as an isolated market. It is a function of the local, state and national economies. If unemployment rises, interest rates rise or other economic pressures are placed on people, the real estate market will be affected. Therefore, you need to pay attention to what is occurring in the wider world. If you are thinking of purchasing an investment property in a location where residents are largely reliant on one or two major employers there is a risk to the stability of the real estate market in that area. If a manufacturer closes their factory, for example, people will not be able to afford their mortgages and properties will come on the market depressing prices. Successful real estate investment strategies therefore must include an understanding of social and economic impacts in a market as well as current and expected trends.

Apart from these broader issues, a successful real estate investor will carefully consider all facets of any individual purchase. The current market value, all the costs associated with the purchase, estimated costs of necessary improvements and likely selling price are all important aspects of any decision to purchase a real estate investment property.

If you do your homework and implement sound real estate investment strategies you will be well equipped to make a good profit with minimum financial risk. As you practice sound strategies you will increase your experience and develop an instinct for good buys and become an increasingly successful investor.

source:searchwarp.com