While this is certainly true, there are some nuances to the market which need to be considered. Take a look at this guide for those new to the real estate investing game.
Investment opportunities in real estate may be better than alternatives like the more homogeneous stock market. This is due to the less volatile nature of real estate. It takes a considerable amount of time to find a suitable property and then the capital required is much higher than simply buying shares from an online broker. These are all factors which keep prices stuck in a trend for many years in one direction or another.
While the national market is easier to follow as it is an average of a very large amount of transactions, there exist opportunities in local neighborhood real estate markets that are worth considering This is due to the inefficiencies which local prices are created by motivated sellers and keen investors can exploit.
Even armed with this knowledge there is still more you’ll need to understand to make money in the real estate market.
Everyone dreams to go from “handyman” to real estate tycoon like Donald Trump whose company owns multiple projects in cities like Miami where his name is featured on the address of many skyscrapers on A1A.
You must understand the market in general as well as the specifics of the local properties for sale. You should look at these four key ingredients to achieving strong real estate gains.
Experience Favors the Real Estate Investor: Find a Realtor for Guidance
While experienced and astute real estate investors may be able to make some money in a weak national real estate investing environment, amateurs will struggle with the particulars of any real estate investment opportunity. It is best to consult a local realtor with a list of questions to understand the current environment.
Rising interest rates can throw a lot of cold water on an otherwise hot real estate market because of adjustable rate mortgages.Borrowers will have to pay more to keep it and those who don’t have real estate often can’t afford it.
Perhaps more important than any takeaway is to understand timing. When starting to build your real estate portfolio, the ideal time to buy property is in a declining interest rate environment.
Since this literally speaks to the overall health of the economic system that supports the real estate market, it’s a given that you should buy when things are strong. This might be counter-intuitive. But as we stated at the beginning, it is experience which wins in this game.
In healthy GDP times, such as growth above 3% annually, it is rare to see significant real estate weaknesses. This is due to multiple reasons. Mainly because very smart investors will sell at the highs in the market and they will be seeking new opportunities for even higher returns.
Well-publicized data like the Case-Shiller Home Price Index and Bureau of Labor Statistics unemployment rates are excellent indicators of the future health off the top real estate markets.
Seek Miami Pre-Construction Opportunities in Outer-lying Areas
If you see the city expanding as Miami currently is with pre-construction properties for sale as they currently are and can tolerate some risk, invest in Miami real estate in the outer perimeter of a given city.
When prices grow too fast , as they are currently in Miami, this could start to suppress real estate values in the short term as nobody can afford to rent or buy properties for local living. Most buyers will be overseas investors. While this can make those who own property swoon, it is an economic hardship many are beginning to experience.
Miami: An International Market for Real Estate Investors
Because the Miami market is more international than most, it is seen as a safehaven for real estate investment.
It’s important to keep in mind that real estate investing values can vary widely within a metropolitan area.
Your most volatile real estate appreciation will happen in the outer ring of cities.
As residential real estate development fills in around these future strip malls, property values will likely jump significantly.
The opportunity for above-average rates of return seems greater in the real estate realm than the financial instrument realm since because are fewer eyes looking at non-homogeneous units.
Understanding these key points can help maximize value of any real estate investing portfolio.