The Why and the How-to of Real Estate Investment

These days, Wall Street and the stock market make people a little wary. The idea of investing your money in something that roller-coasters up and down on a regular basis doesn’t exactly sound, well, sound. Besides, it’s complicated. There are stocks and bonds, bull markets and bear markets. You need to know when to sell and when to buy. For that matter, you need to know what to sell and what to buy. The system is all well and good for someone who understands that kind of thing, but you don’t. However, you also don’t want to leave your money sitting in a bank account when it could be growing, creating extra income that could come in extra handy given the economy. So what should you do? Why not invest in real estate?

Housing prices, particularly for houses in foreclosure, are low but rising. You can buy a home in Austin now at the bottom of the market for much less than you will be able to in a year or even 6 months. And if you have the patience and determination to make something of your investment, you can make reasonable gains even before the real estate market has fully recovered. But just like when investing in the stocks and bonds housed in New York, you need to be knowledgeable when investing in the homes and condos of Texas. Here are a few tips to get you are on your way:

Know what your end goal is. Do you want to buy a home, flip it and sell it flat out, or do you want to buy a home, town-home or condo and rent it to tenants. With the first, you’ll have a one-time opportunity to make a profit on any given lot. You will buy, make the renovations, spruce up the interior and exterior, and hope that by the time it’s on the market, homebuyers are willing to pay more than what you’ve invested. If you lease your space instead, you will hopefully have a steady income of rent, but you will also have to maintain upkeep and likely pay the utilities, which can vary depending on the tenant and the region’s prices. If you rent, it is quite plausible that you will make only enough to cover the mortgage for the first few years, and won’t begin making a healthy profit until the home is owned outright.

Once you have decided what you’re going to do with your property, you need to figure out how the money you need to invest will be used. There isn’t just the home or the condo that will consume it. You may also have to pay a real estate agent or broker. If you can’t renovate on your own, you’ll have to pay a contractor and construction crew. Even if you are able to tackle most of the projects solo, you will need to purchase materials. There is no point in selling a home for $10,000 more than you bought it if you have invested $12,000 since purchase.

Finally, go in levelheaded. Be aware that this is a risk. There’s no sure bet in real estate, even in a city as strong and vibrant as Austin, Texas. You may lose money. You may not make a profit for years. By choosing to invest in real estate, you are choosing to go out on a limb. But if you are one of the hard working ones doing so may be well worth your while.

About the Author:
Joe Cline writes articles for Austin Texas Realtor. Other articles written by the author related to Cedar Park real estate and Austin real estate can be found on the net.