Real Estate
From buying a house to investing in real estate, there is no lack of people offering advice (ranging from free to costing thousands of dollars). Here are some important things to know about investing in Real Estate:
Buying a home is often, but not always the best choice. At this time housing prices are at a historic high, so the choice is more difficult than usual. You can read more about this in my eBook Commentary on Kiyosaki.
If you invest in Real Estate, structure the deal so that your income from rent is higher than your total payments. This is especially important when housing prices are high.
Unless you’re already a real estate expert, be sure to hire some (on everything from inspections, to lawyers to help with the transactions, to accountants to help with the financials and taxes). It’s a complex subject.
Many experts believe we are having a “housing bubble” and that real estate prices are in the process of collapsing. We are most likely at the peak of a housing cycle. Based on historical cycles, national average prices are likely to drop to 2003 levels (about 20%). However, all real estate is local. Some areas will continue to experience growth. Others will see significantly greater drops. See Housing Cycles – This Time With Pictures.
Based on historical averages, housing values increase about 2% over the rate of inflation. Some areas have obviously seen greater increases; others have seen drops (especially areas where the population is decreasing).
Short term interest rates are rising, as might be inflation. Now is a good time to consider refinancing to a fixed rate loan.
Real estate is a highly leveraged investment. That means that when housing prices are going up you can benefit greatly because the amount of cash you spent is small compared to the total value of the investment. However, it also means that when housing values are dropping you can lose everything.
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