The real estate market has changed dramatically in 2014. Mortgage rates lowered and lenders relaxed their lending criteria. The real estate market also improved due to the increase in new homes. Builders started work on new homes in September 2013 and housing inventory increased by 6.3% by mid 2014. As the number of multifamily and single-family homes increased, buyers had an increased amount of properties to choose from.
Good Time to Invest?
For private buyers and investors, this is a great time to jump into the market states industry expert Jeff Adams. Due to the slow increase in property prices, large investors and investor groups have backed out of the market completely leaving the arena open to small investors. However, Adams also states that the 2014 real estate market is dramatically different. If you are planning to invest in the market, he states you should know a few things about the market to make your investment a success.
Location
Location is the most critical factor for any property. Unlike earlier years, it is not a good idea to invest in large first tier cities like New York, Washington DC and San Francisco. Investors have already purchased properties in these cities and prices in these areas have increased substantially. Investors recommend choosing second tier cities like Houston, Dallas, etc. as they still have properties available for sale in affordable price ranges. The market does tend to change quite quickly. Take the time to research the market and individual cities before you spend any money.
Use Someone Else’s Money
Investing in real estate means you do have to shell out a large amount of money in the form of down payments. This is particularly true in the 2014 real estate market. Investors can choose from pre-foreclosures, foreclosures, short sales, auctioned properties, etc. All of these investments require large cash upfront payments. To ensure quick and easy purchase, you should pre-approve a loan from a bank or a lending authority.
Calculate Returns
The property you invest in should provide financial returns of about 1% of the sales price. For example, if you’ve purchased the property for $200,000, you should get an income of $2000 per month in rent or about 12% annual yield. Rental rates are increasing in most cities and you should be able to get this rate in most cities. However, if you don’t get these returns on the property, you are not making a sensible investment. However, to assess these returns, you should have basic math, accounting and real estate skills.
Proper knowledge and preparation is the only way to succeed in the real estate market says Jeff Adams, the #1 real estate trainer. He recommends you read up as much as possible about the current market conditions before you actually start investing. If possible, prepare by taking an accounting course and a real estate investing course. With the right knowledge, you should be able to pick properties that actually make a profit over time and triple your investment.
