Purchasing Real Estate - Investment
Many out there today are very wary of purchasing real estate.
After all, popular opinion holds that because so many people purchased a house during the last decade, that caused prices to inflate beyond their real value and crash, giving us what we now have in the recession.
But keeping in mind the purpose of real estate as an investment is important.
All of us need to live somewhere.
When we purchase a home to shelter us and our family, the mindset and purpose behind that purchase are completely different than if we are looking for rental income, tax advantage or a vacation home.
Statistically speaking, prices in most areas of the country have not been as low as they are now.
The time to consider purchasing real estate, either as a home or as passive or supplemental income, is definitely looking better and better.
There are many reasons to do so, some of which have already been mentioned.
Creating a passive stream of income is desirable for many reasons and real estate can be a great way to do so.
Part of the problem we face now in deciding to purchase is money.
Lending for property has been severely curtailed and as foreclosures continue, those lending standards and practices will continue to change and become more stringent.
Several years ago, if you had a pulse and could sign on the dotted line, you could get a loan to buy a property.
Now, that is just not possible anymore.
Lenders want to see you putting your money where your mouth is and having some skin in the game.
If you want this property to rent out and supplement your income, you had better come to the table with at least 20% down payment and closing costs or you'll be laughed right out the door you walked in.
Equity protects both parties involved in the transaction.
Equity is the difference between what the property is worth and what is owed to the lender.
That difference is what allows banks to loan and standards to be set.
The lack of equity as shown by the housing market collapse is risky for all parties involved.
Purchasing real estate has benefits, but there is a science and method to it to follow for it to perform as best as possible.
So consider the benefits for you of purchasing real estate in this era of cheap prices.
Don't be afraid that prices will fall or tenants will leave or bad plumbing.
All of that can be dealt with and the rewards can be great.
After all, popular opinion holds that because so many people purchased a house during the last decade, that caused prices to inflate beyond their real value and crash, giving us what we now have in the recession.
But keeping in mind the purpose of real estate as an investment is important.
All of us need to live somewhere.
When we purchase a home to shelter us and our family, the mindset and purpose behind that purchase are completely different than if we are looking for rental income, tax advantage or a vacation home.
Statistically speaking, prices in most areas of the country have not been as low as they are now.
The time to consider purchasing real estate, either as a home or as passive or supplemental income, is definitely looking better and better.
There are many reasons to do so, some of which have already been mentioned.
Creating a passive stream of income is desirable for many reasons and real estate can be a great way to do so.
Part of the problem we face now in deciding to purchase is money.
Lending for property has been severely curtailed and as foreclosures continue, those lending standards and practices will continue to change and become more stringent.
Several years ago, if you had a pulse and could sign on the dotted line, you could get a loan to buy a property.
Now, that is just not possible anymore.
Lenders want to see you putting your money where your mouth is and having some skin in the game.
If you want this property to rent out and supplement your income, you had better come to the table with at least 20% down payment and closing costs or you'll be laughed right out the door you walked in.
Equity protects both parties involved in the transaction.
Equity is the difference between what the property is worth and what is owed to the lender.
That difference is what allows banks to loan and standards to be set.
The lack of equity as shown by the housing market collapse is risky for all parties involved.
Purchasing real estate has benefits, but there is a science and method to it to follow for it to perform as best as possible.
So consider the benefits for you of purchasing real estate in this era of cheap prices.
Don't be afraid that prices will fall or tenants will leave or bad plumbing.
All of that can be dealt with and the rewards can be great.
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