Real Estate Investing Tips for 2011

Are you looking for a great way to invest?  Real estate is a great investment option, especially in the current market.  Property tends to go up in value pretty steadily over time, even despite small setbacks, such as the down market we’ve had more recently.  Like the stock market, real estate is primarily meant to be a long-term investment, though there are opportunities to flip houses (buy, fix up, and quickly resell) if you have the knowledge and skills to do so.

However, the current market conditions offer some unique opportunities for someone who wants to invest in real estate.  Because of the depressed market, you can buy at some pretty good prices right now; but since all the signs indicate that housing values are coming back up, you will be able to sell at a much better price if you sit on it for a little while.  The key to successful investing is to buy low and sell high, which makes 2011 a great time to buy real estate!

Here are a few tips to help you successfully invest in real estate in the coming year.

The Early Bird Gets the Worm

The housing market crash has taken several years to recover, but all the signs now indicate that housing values and sales numbers are coming back up.  In other words, 2011 offers a limited time when you can buy low knowing that the values are coming back up, and your investment will be a good one.

The problem with opportunities like this is that they are typically very short.  As people see signs of recovery in the real estate market, their confidence will grow, and they will buy more — ultimately causing values to rise.  In other words, the sooner you buy, the more likely you are to get a low price, and the better the return on your investment will be.

Take Advantage of Low Rates

Another good reason to buy in 2011 is the low mortgage rates.  Unless you have a few hundred thousand sitting around, most likely you will need to take out a loan in order to invest in real estate.  Since the more interest you pay, the harder it is to get a good return on your investment, it is in your best interests to get as low a rate as you can.

Even if you plan to rent the house to cover the mortgage, getting a low rate is a good idea.  It may save you $100 or more a month, which could allow you to set a more competitive rent or put money in your pocket every month.

Turn Your Old House into a Nest Egg

Real estate is the kind of investment that the average person can easily take advantage of.  One popular way to turn your home into an investment is to keep your old house when you upgrade to a newer or bigger home, and rent it out in order to cover expenses such as the mortgage and necessary repairs.  The longer you hang on to the property, the more it will be worth.  There are many stories of couples funding their retirements by selling their first home, which they have been renting out for many years and own outright, usually making many times over what they originally paid for it.

Fix ‘n’ Flip

If you have the skills, buying a home at a low price, fixing it up, and selling it for a profit can be a very lucrative venture.  However, as with all businesses you will have to mind your profit margins carefully, so you will make the most money at this if you have some handyman skills, or if you have a business partner who does.  Otherwise, you will be paying someone else to do the work, which will make it more difficult to earn your paycheck when it comes time to sell.

You’ll find that real estate is a popular way for many people to invest, precisely because it is so readily available to people.  Keeping and renting out your old house when you upgrade to a new home is one of the most common ways that people invest in real estate, but there are many other ways that you can take advantage of this lucrative investment!

BIO:  Diane Ferraro is a freelance writer for a La Jolla real estate company.  When she is not writing or blogging, she loves to spend time with her twin daughters.