Quickly rising costs of homes across the United States over the last number of years has gotten many people’s attention. In fact more than ever are people interested in pursuing real estate investment. Real estate can be a tricky market; not something you want to get involved in unless you have some good knowledge and experience. Although there is no substitute for experience, this article will provide the amateur investor with some helpful tips on how to intelligently invest in real estate.
Granted you have some idea of what kind of property you would like to invest in, the most important factor in your decision should be the appraisal. This step is so important that it is worth your time and money to hire a professional with a lot of experience in property appraisals. The appraiser is trained in analyzing the property and its surrounding local market to come up with the estimated value. A common misconception is that appraisers create value, but in reality they interpret the market to estimate a value. They will consider things like the size of the property, its location, the amenities, and the condition of the structure, just to name a few. Having a property appraised is simple advice but it truly gives you an idea, as an investor, if the investment is worthwhile. You would hate to sign the papers only to find out the market is not what you expected, or that the property actually has some faults that will decrease the value you recover from it.
In addition to having the property appraised it is important to be able to forecast the entire local market as an investor. You must look at a market and decide if it is profitable or not. One indicator that most investors will consider is the average time a house is on the market in that area. If homes are selling fast and their average market time is low, this is a good sign that the market is hot and could be profitable. Another statistic to take into account is the difference between the original asking price and the final sale price. If there is a huge difference, there is a good chance that the market is soft and not favorable for an investor. On the other hand if the average sale price is close to asking price, the market is likely strong.