About Real Estate Investing

About Real Estate Investing

by Darryl Degenhardt

Real estate investing is a hot topic again. It’s a funny thing how one day everyone wants to dump their real estate investments and the next day everybody is jumping back in. Well, it’s no wonder. The real estate investing community went through such a gyration, including all of the crazy buying that speculators went through over the last few years. The last two years have been one of the worst in history.

Real estate investing has leaped forward and finally back upswing. How so? It is because the numbers of property values, that have dropped so low, have started to make sense once more. Tracing back, housing prices have dropped big time, ranging from 20% to 50%, which has made the homes more affordable to acquire. To help new home buyers buy these homes, the “bad behavior” on the part of the speculators was discouraged and the government has also stepped in as well.

In this recession, how can one benefit from real estate investing? Let’s do a bit of the math. If you can finance a $100,000 mortgage at 6%, your mortgage payment is somewhere in the $600 range. If you add property taxes and insurance, your monthly outlay would probably be around $750. Now, assuming you can rent that property out for $900 monthly. A cash flow positive investment is more visible now.

Having that real estate investing scenario, it simply does make sense to hold on to that property for 10 to 20 year more and get great financial benefits. Why do I say so. The logic is that outside of general maintenance on the properties, you’re getting someone else to pay for your mortgage. Also if property values increase over time, you could get even more benefits from a big windfall, when it comes for you to sell the property.

It’s safe to say that real estate investing plans have failed for the last several years. Just like any other plans, the plans of people who bought properties at extraordinarily high values did not fall accordingly. This is because recession happened, and the properties have lost their value. More so, no one could re-finance or carry the loan payments any more.

Real estate investing is not for anyone to just go into without thinking. The drastic change of fortunes happened a few years back can happen to anyone. In real estate investing the phrase “location, location, location” is especially true. You need to make sure that the numbers are “pencil in.” Those markets may never come back again. So, if you think you’re going to take a cash flow negative property and hold on for property value increase, you should think again.

This is why it’s extremely important to know what you are doing in real estate investing. There are several companies, gurus, etc. who purport to tell you how, what, when and how much. Many of the gurus are fly-by-night scammers. They will try to sell you a bill of goods. You should make sure to look at gurus who have been around a while and have a loyal following. Some examples of these people are Donald Trump, Robert Allen or Carlton Sheets. Basically, they’ve been there, done that.

About the Author:

Darryl Degenhardt, a well-known professional who understands that superior client service and dedication are smart business. He has found great opportunities in real estate investing.

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