Real Estate Investment Facts that You Must Know

Like any other form of investment real estate investment has its own set of rules. However, anyone can profit from real estate investments by using some common sense and some expert advice. You will need a real estate agent and a broker to find you some good deals. You will also need the help of an inspector who will ascertain the condition of the property. Whether every thing from wiring to plumbing are in the right condition. Lastly you will need a lender who will usually be a bank working through a lending company. They should understand your investment objectives and be able to give you the best deal.

To many people investing in real estate property means buying a home. However there are different types of real estate properties that one can invest in. There are two major types of real estate investments, business and residential. Both are governed by different sets of rules.

Residential real estate can either be a single family unit or multi-family unit. While a single family unit is independent, in a multi-family unit the walls are shared like in town homes or condos. Business real estate also can be divided into several categories like office buildings, shops, manufacturing units, etc. These are the commercial properties and are governed by different regulations like zoning rules and the lease will have divisions for tax and insurance.

There are some areas which can be utilized for both commercial and residential purposes.

You should know how to time the real estate market to be able to make handsome profits. You don’t need to be Donald Trump to be able to do this. First you should know what type of real estate market exists in your town. A buyer’s market is said to exist when more than six month’s of inventory, or houses for sale, is on the market. If you can wait then it is the best market to invest in. In a buyer’s market you have many advantages. The sale prices are lower, buyers can get concessions, contingent offers are more acceptable (you can set the condition of paying after you sell your existing property) and buyers can control the transaction and requests for repairs are negotiable.

A seller’s market is said to exist when there is much less than six month’s inventory on the market. If there is no urgency it is not advisable to buy in a seller’s market. It has a lot of disadvantages. Due to multiple offers the seller can get the top price. The sellers don’t agree to concessions like paying for inspections or buyer’s closing costs. Sellers do not honor requests for repairs, contingent offers hardly happen and they control the transactions. Thus it is very difficult to get a good deal in a seller’s market. The reverse is true when you are selling property. You should sell property in a seller’s market.

A neutral market exists when there is about four month’s inventory on the market. The market does not favor either buyers or sellers although a few good deals either way can still exist. However overall the market does not overwhelmingly favor either buyer or seller. Another important factor to look for in real estate investment is the environment. One area may have more young people and another may have more older people. The real estate prices and timings will depend on the demographics of a particular area.

Knowing when you have a deal is important when you are investing in real estate. A good deal is made when the seller, buyer and agent walk away feeling that they have made a good deal. A good deal also depends on the finances that are involved in it. It should involve the right loan with specific terms and conditions. The lender should offer upfront fees and the best rates. There should be no extra fees or costs involved. This needs a thorough investigation of all the financing offers available. A good deal also means that the condition of the property should be inspected with the help of a property inspector to ascertain whether the property is well maintained and if it needs further repairs.

Like any other investment, real estate investment will have its ups and downs, but it has several advantages over other forms of investment. As people are always moving to new areas and as it is one of the basic human needs there will always be a market for real estate. This lends stability to real estate investments. Even if something happens to make the real estate market to go down you can always expect it to bounce back. If the investments are handled properly with expert advice it is also possible to earn a steady passive income from real estate investments.

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