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How to Get Into Real Estate Investing in a Down Economy
Home Finance Trading / Investing
By: Claud Pearce Email Article
Word Count: 525 Digg it | Del.icio.us it | Google it | StumbleUpon it

  

Did you ever think of getting into a business that garner nothing but negative feedback from every people you know? Most likely your family and friends would discourage to go any further before you even made your first move. However, you should also know that, there are always risk in any form of business and if you see potential, you'll still go for it no matter what. This is the same with the current real estate situation. Many feel that it’s not the best time to invest in it. But before you even get started, you need to thoroughly study on how to get into real estate investing with you coming out on top.

Here's the thing that you will have to face. First, there is a large decrease in the prices of houses. Comparing the first quarter of 2011 and 2010, one will notice the 4.6% decrease in property prices. This is a huge indicator that the real estate industry is in bad shape shape. Second, the growth in sales of distressed property has increased from 36% last year to 39% this year. Eventhough foreclosed properties are generally more attractive to buyers because of the lower cost, it can actually affect their long term financial status. This is because most foreclosed mortgage borrowers are certainly paying more for the house. Having these in mind will truly be important when considering how to get into real estate investing without losing money.

Knowing that there is more to real estate investing than just buying properties and selling them for a profit is important. In fact, there are other techniques to earn from real estate. One way is to consider renting properties as it is a better alternative to consumers.

Annual rent is a lot lower than mortgage payments. In fact, mortgage rates can be twice as much as rental rates. As a real estate professional, it is vital to aid clients come to the best decision regarding properties. Choosing to dish out 2.5% rental rates over a 5% mortgage rate is without question a great advice you can give.

As a rule of thumb, when annual rates over rental rates add up to 3%, prices are too high for the clients to buy. In such cases, renting properties are better options. If it s at 6%, this is at the border line and anything goes. However, if it reaches 9% or more prices are most favorable for buying properties. With these basic guidelines you’ll know how to get into real estate investing the smart way.

The current real estate situation usually pushes real estate investors away. In fact, there is a huge decline in the number of people going into real estate in recent times. The National Association of Realtors recorded a drop of 21.4% in their membership. This shows how scared many people are in venturing into the real estate industry.

Although there is much weight to their concern, it doesn't mean you can no longer earn from it. Know how to get into real estate investing by knowing the risks and providing solutions.

Claud Pearce is an active real estate investor based in Cincinnati, Ohio. He is a member of the Greater Cincinnati Real Estate Investors Association and works exclusively with investors who want to grow, learn and succeed at real estate investing. Get more information now at http://www.cincinnatireia.com.

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