Real Estate Investing - Why invest in Real Estate?
Real estate investing is frequently shown on those late night TV ads. We’ve all seen it on TV “Get rich quick by investing in real estate!”, “John Doe made xxx in 2 months!” and so on. By the end of the commercials, we are left wondering hey, if they can do it, why can’t we? Is it really that easy to get rich in real estate?
Is it possible to achieve financial success in real estate? The answer is yes. Is it easy? No. There is no magic potion for financial success, despite what the TV commercials may imply. Most successful real estate investors will tell you that it all started with a vision, lots of determination and motivation, endless planning and researching and most importantly, taking action.
What makes real estate investing so attractive? Or why buy real estate at all? It's been said about real estate that "they aren’t making any more of it". Well, the basic 4 benefits of investing in real estate are:
1. Cash Flow
Cash flow is the amount of money left after all the operating expenses (property taxes, insurance, repairs, maintenance, etc.) and mortgage payments have been made. Ideally, you’d want a Positive Cash Flow.
2. Loan Amortization
A portion of each mortgage payment is applied first towards the interest charged by the lender and the rest is applied towards reducing the balance of the loan. Thus with each mortgage payment, the loan balance or principal is reduced and the equity increased.
3. Tax savings
Real estate investing also offers some tax advantages generally not found in other investments. The tax laws allow real estate investors to deduct many operating expenses, depreciation and even defer capital gains.
Appreciation is the increase in value of a property. Many homeowners have seen their wealth increase due to property appreciation.
Another characteristic of investing in real estate is the ability to use leverage. Leverage is sometimes referred to as using “Other People’s Money”. Leverage enables many real estate investors to grow their wealth quickly.
Apartments in Fresno provide almost 30% of local housing and while the market was flat in the 90s, apartment construction was virtually absent.
So while the population in Fresno has increased, the supply of apartments hasn’t. The result is high demand, low vacancy and increasing rents…factors investors should love to hear!Real estate investing is not rocket science.
Most average person can invest in real estate and achieve financial success. BUT it does take work.
First, take the time to understand the buying process and the general real estate investment terms and concepts. Read all the real estate investing books and articles that you can find.
Learn how to research the local real estate market and demographics, perform rent surveys and find financing options. Research property managers in the area and interview them. Most investors fail when they neglect to do their due diligence!
Finally, all the time and energy invested will not amount to anything if you don’t take action.
Fear of losing money is generally what stops people from taking action or investing in real estate but remember this: it is also this lack of action that is preventing them from making money. It is up to you.
Real estate investing is a great way to build your wealth and it has been proven time and time again. So yes, if they can do it, so can you!
If you are serious about investing in Fresno real estate, let us be a part of your team today. What makes us different from the other agents? We understand the many different facets of real estate investing.
This means you will have someone who is able to guide and assist you from your initial goal-setting phase through selection and acquisition of your investment.
We are passionate about real estate. We make it our business to keep up with the local and state real estate news. We are continuously educating ourselves on real estate whether it is through books, classes or seminars, so that we are better informed and can therefore serve our clients better (our book shelf is starting to look like the real estate section in Borders!).
We pledge to treat every client with the utmost respect, honesty and integrity. We also pledge to continuously give the highest level of competent, ethical and quality service to our clients.
If you already own real estate in Fresno, click here for a check-up on your investment to ensure that it is healthy and functioning well.
For buyers looking to invest in the Fresno real estate market, here are some tips:
1. Commit yourself to doing this and stay focused
2. Plan your investment strategy. Write it down.
3. Locate your sources of investment capital
• Conventional financing is generally available for 1-4 units thus you might be able to get as low as 10% down.
• Commercial financing is required for 5 units and up. Traditionally, this means that you need to have at least 30% down. But lenders are becoming more aggressive and we are now seeing commerical loans available with just 25% down.
4. Get pre-approved for a loan
• Call several lenders - direct lenders, mortgage brokers, etc.
• If they're not located in Fresno, ask if they have local contacts in Fresno especially for appraisals.
• Ask how much time they need to close a loan
• Ask if they've done loans for investment properties before
• Don't go with a lender just because he/she quotes you the lowest rates
5. The real estate market in Fresno is hot, and competition for properties is fierce. There are multiple offers for each property that comes up on the market. You need a knowledgeable and committed agent working for you so call or email us and get us on your team today!