Why do we invest in real estate? Money.

With today’s real estate market trend, it could be a good time to start investing in real estate…especially with reduced prices and foreclosures. BUT, if you don’t know what you’re doing, it might not be a great idea.

No doubt, investing in real estate is difficult. You are competing with multiple, legitimate offers. Investors are now crawling out from the caves.

You have to treat real estate investments just like like you’re buying a home to reside in. It requires you to rack up your financial goals, and start mapping out a lifestyle that is able to support your investments.

You’ve already reached the half way mark if you have the money (obviously), lifestyle, and most importantly the time to manage your real estate investment.

The other half requires the following:

• Own Your Home First.The main reason why you should own your own home first, aside from having a place to stay, is simply because you’re gaining experience in buying and owning a property. Think of it as practice. It preps you up for financials, market conditions and maintenance.

The other benefit of owning your own home prior to investing in real estate is that you can potentially turn your primary residence into an investment property. Rent your home and upgrade into a larger house in a better location.

Note: If you are upgrading from your existing residence, lenders will most likely require 20 percent equity in your current residence prior to lending for another property.

• Get Educated. Take advantage of useful resources, such as the Internet, books, investment groups, college/university courses, or even fellow real estate licensees to better acquaint yourself with the industry. There are plenty of real estate sites that very helpful. To name a few: zillow.com, trulia.com, realtor.com (highly suggested), and yes…activerain!!

• Get Help from a PRO. Now is probably the best time to seek help from an experienced, competent realtor or lender to assist you in your real estate venture…the right way. Look for a mentor, the same way you seek for a trustworthy and honest professional that is looking out for your best interest. Get referrals from friends, family, clients, other professionals, co-workers…just about anyone. Get help from a real estate professional, but not just anyone. Trust the professional.

• Learn the Market. Understanding the market you want to investment is the ONLY key to success and making money. You may buy a property in a market that gives you a vacation rental income, which covers costs of principal, property taxes, insurance, maintenance, homeowner association dues…but does not appreciate in value. Yet, purchasing a property in a market that may not bring in sufficient rent to cover costs of owning the property, but might appreciate in value to potentially make up any loss from the costs.

Either way, the outcomes are unpredictable and you must keep a close eye on the market and keep your ears open for any market changes.

The risks of investing is most definitely there. That’s why it’s crucial to have an Exit Plan mapped out just in case your calculations are off and you need to unload your property.

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