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Real Estate Investments

A real estate investment is a tried-and-true way of generating passive income and now is a terrific time to buy. Although market conditions will affect the worth of your holdings, unlike other investments real estate is tangible, concrete property that will always be of value in good times and in bad. If you're ready to invest in real estate, here are a few tips to help you get started.

Establish Goals

If your intention in pursuing real estate investments is to "flip" homes in hopes of turning a speedy profit you will have to do your homework. Just a few years ago many people aggressively invested in real estate with the idea of quickly reselling the properties to earn a fast return. Today's market conditions dictate that if you are considering this option, you must first find the right area. Consult with a real estate professional and seek localities where homes are selling briskly. Next, find the right property. A distressed home that needs only cosmetic upgrades such as new paint or landscaping will sell faster and require less initial cash outlay than one that requires extensive work. Lastly, consider that in the current market your property may remain on the market for months. Do you have sufficient capital to carry the property long-term? In today's economic climate, it might be a better idea to invest with the idea of passive income and eventual appreciation in mind.

Don't Fall in Love

Anyone who has ever bought a home knows that it is a romantic experience. This one has the pool that the kids will love and that one has the gourmet kitchen you've always wanted. When setting out to buy an investment property, it's important to distinguish between buying a house and buying a home. Many first-time investors make the mistake of buying exclusive, high-end properties that are stunning but difficult to rent for extended periods. Since there are less buyers looking for upmarket properties, if you decide to sell the house it may linger on the market for months. It's generally a better idea to look for a property in a suburban neighborhood, near good schools, transportation corridors and shopping districts. What are the rents for comparable houses in the area? Will the rent cover all or most of your mortgage payments? Can you expect to rent to a family that is happy to stay - for years?

Establish a Team and DIY

Once you've decided to invest in a rental property, you'll have to get used to the idea of yourself as a landlord. That means that you will be responsible for leaking roofs and plumbing emergencies in your rental home as well as your own. It's a good idea to establish relationships with a team of professionals who will work with your needs and budget. Have your own plumber and electrician on call in case of an unexpected event. On the other hand, you can save money by doing many home improvements and cosmetic changes by yourself. Things like repainting, installing new linoleum in the kitchen or reseeding the lawn are tasks that can be completed inexpensively and without extensive training.

In the end, your decision to pursue real estate investments will come down to many factors including your present capital, the rate of return you expect and your experience with home improvement and DIY projects. Overall, investing in real estate is a time-honored tradition for those who want to build and maintain lasting wealth.