Many consumers still feel the sting of the housing market fallout of the mid-2000s. Many investors and banks lost their shirts on foreclosures and mortgage bankruptcies. Forecasters are predicting various outcomes for the future of the real estate market, which has some investors with extra capital considering getting back into the real estate game.
It seems like those who made out the best with real estate investments are either the ones who held on through the storm and still own their properties, or the investors who got out at the top.
Warren Buffett, who seems to have the Midas touch, has never lost money on his real estate investments. Of course, having the disposable income to find property for sale and hold onto something and wait out the storm is a huge advantage. But what he also has is good business sense, and he doesn’t succumb to panic or pressure.
There are ten tips that many real estate investors, including Buffett, claim as being responsible for their windfall in good times and bad. If you follow these rules, investing in the real estate market makes sense regardless of whether it is a buyer’s or seller's market.
After all, just like the stock market, it isn’t about what the market is doing; it is about being on the right side of the supply and demand chain. If you are going to take the risk of investing in the market again, make sure to consider these tips from the professionals who know best.
1 Listen only to those you trust
Don’t listen to the hard sell. Only take advice and trust the people you know. In the end, the only one looking out for your investment is you. That is why you shouldn’t ever take someone’s word for anything unless you trust them.
2 Know the difference between the value of something and its price
There is a supreme difference between the price of something and its value. Think with your head and never assume that the two are equal.
3 Purchase and keep
Time is a great thing for a good investment, but it could tank a bad one. Make sure to hold onto those things that will increase in value but dump those that don’t, then move on. Don’t throw good money after bad.
4 Only buy something you are okay with keeping
If you are going to invest in property, make sure that you like it. The worst-case scenario is that you will own it forever. Make all your investments based on the reality that it might be yours for a lifetime.
5 Make sure you look around
The key to real estate investing is waiting for the right property. Some investors don’t want to wait or spend the time doing the legwork. If you jump too quickly, you might be missing the best investment opportunities available.
6 Don’t wait for the perfect deal
In the same respect, don’t look for the perfect deal that will bring you a pot of gold. If you continue to wait for the perfect investment property, you could be missing out on the smaller ones that can bring you supplemental income before the big score.
7 Don’t get into a bidding war
Sometimes the biggest motivator is winning. Remember, bidding wars aren’t really winning; they are still paying the highest price. If you let your competitive side take over, then you are probably going to overspend. Set a price in stone and be prepared to walk away.
8 Do your financials
All too often, real estate investors convince themselves that there is more money to be made than there is. Factor in everything from financing costs to construction to market analysis. Always err on the side of overestimating costs instead of getting caught in over your head.
9 Know the difference between the real estate market and real estate investing
There is a supreme difference between buying and selling a house for your liking and investing in a property. Make sure that you don’t confuse the two and become emotionally attached.
10 Skip the seminars
There are a lot of "experts" out there trying to tell people about how to get rich quick. In reality, the only ones who are getting rich are the people who are selling the seminars and books. Don’t look to so-called “experts” to teach you to invest. Do your own research.
There is always money to be had in any financial market. You just have to be on the right side of the supply and demand chain, not just trust anyone unless they deserve it, and never make an emotional buy, especially in real estate.