It’s the first reaction many people have when someone asks them how they’d like to invest: real estate. It’s a field where many people have made millions and even billions, so there’s great wisdom in that response.
However, this isn’t your father’s real estate market. What was done in the ’70s and ’80s is no longer the best route to go, or at least, things don’t have to be as difficult and risky as they were back then.
The modern real estate industry has lots of potential for profit and loss, just as it always has. The difference now is in the investors and the economy. Here are the most prominent elements of today’s market that are different from older editions.
Sometimes there can be strong growth in certain markets even if the overall economy is not so great. When you can identify those areas accurately and take steps to invest in real estate there, you can realize some nice gains.
It sounds simple enough, but it’s not. Some markets are obviously bad, like Detroit. Others are perpetually good, like south Florida. But the average person knows to avoid Detroit and go for Florida, and the profits are gobbled up by the flood of Captain Obvious investors.
What you have to do is identify the sneaky strong markets, those that aren’t in the news as a roaring community but are nevertheless reaping good rewards for buying and selling, or for renting. And that identification process can be hard to do if you aren’t in the market world all day, every day like Danny Levin and Drew Perkins, the real estate professionals from HGTV who know their Minneapolis market as well as anybody else. You get into contact with people like them and you’ll find the strongest geographical areas for investment.
Underneath the local markets lies the national market. This is the boat where the whole thing floats. The areas that are strong in a bad economy are like the upper levels of a cruise ship, and the struggling areas may be at or near the water line. But they all get higher if the water rises, and they all get lower if it drops.
There are a number of signs that suggest the tide is rising. Unemployment is down. The stock market is strong. Oil has gotten very cheap (some may say too cheap, but that’s another topic). And while the Fed is eyeing a slight increase in interest rates, it is unlikely to spur any inflationary response.
The message is this: Should your local inside information not pan out, there’s no reason to panic. The overall economy stands to improve enough to help you survive. You may not be as robustly profitable as you’d like, but there’s no imminent crash that will cut you down either.
New Ways To Invest
Ever had one of those "if only" conversations about investing? You may have $10,000 you’d like to invest and you’d love to get into real estate, if only you had some people to go in on it with you.
There’s no longer any reason to hesitate just because you can’t go it alone. Those people are out there now. And you can hook up with them through crowdfunding, a way of bringing together like-minded people who have money they want to put into something that someone else can’t pay for alone.
Bear in mind that crowdfunders aren’t just strangers with a pocketful of cash. They are qualified, reputable people who will not only provide money but also expertise that can help make sure your venture is a success. In fact, crowdfunding can be a good route for you even if you have the money, because investors who know the situation better than you will be on board to advise you.
They still aren’t making more land, so scarcity will always boost the real estate market. But the ups and downs of the market still pose some risk, so the last few years have been a little tough. The combination of local hot spots, an overall improved economy, and new ways to pay your way into the market present a great opportunity for the right investor.