by Dario Dingwall
Real estate investing in the USA can be a tricky topic to discuss. Some investors are turned off by the current state of the economy as well as the sluggish real estate market. On the other hand, there are many properties that are just ripe for purchase at a price that in only a small portion of what it is actually worth. Foreclosures are only one way for the smart visionary to start real estate investing in the USA.
Many think that with the current economic crisis, accessing finances for their first property is difficult. However, with persistence, the right chance and the correct location, investing in real estate in USA is a feasible goal. You need to ask yourself, what the right locations and opportunities are and why some properties are better compared to others.
Right location: real estate investing in the USA does not mean simply buying any and every property that becomes available. First you must know what the actual market value of the area is and what it will likely be for a while. For instance, if you are purchasing a home to use as a rental, you must know what the average rental property is going for in that area. If the amount is far below the mortgage price on the home, you will be losing money every month. On the other hand, there are many foreclosures on the market that will be sold far below what they could be potentially worth.
A note on foreclosed homes: Be aware of what a foreclosed home could be worth and what actual value is and then figure the difference between the two numbers. Real estate investing in the USA requires that you be aware of many factors involving not only the market and economy, but the mentality of the former homeowners.
When a home is foreclosed, the homeowner may literally destroy the property and not always in obvious ways. There have been reports of cement dumped in drains, wiring removed from behind walls and other things that could drive up repair costs far beyond the homes value. If you buy a foreclosure for $30,000 but spend nearly that amount in replacing wiring, pipes and other repairs you will never recoup your investment if the average home in the market is valued at $45,000.
Short sale of property is the other feasible approach to making investments in the real estate market in United States. Many homeowners prefer to engage in short sale to avert foreclosure. The homeowners enter into agreements with their respective banks that allow the banks to sell the homes on their behalf at a price less than the initial loan. This is practical when the amount of loan is greater than the value of the home. Short sales allows investors to purchase more properties that what they previously anticipated.
Prior to making any engagement to sell or making any offers, it is crucial for you to assess the market prices of the other houses that are in the same neighborhood. There are professional home appraisers that can help you in identifying potential difficulties and costly areas that must be dealt with prior to making an investment. Keep in mind that a sound investment is the one that will not require the use of additional funds to renovate the home.
In the US, investments in real estate market should not involve purchasing assets that will not be utilized for the intended purpose. You should not invest in homes that are uninhabitable, as the house will sit empty while incurring extra costs.
Despite the fact that real estate investments in the USA are valuable, this is not the case for all investors. Depending on the locality, the costs of the property and maintenance can be greater than the income that it generates and ends up bringing losses. For instance, if your house is being mortgaged for $500 in a neighborhood that rentals go for $550, you will be losing money month after month especially if you are inclined to breaking things. You will thus be forced to bear all the costs associated with replacing and repairing the broken stuff.
With proper investments, the real estate market in the United States can prove to be profitable. Buying homes after foreclosures or those on short sale is capable of being very lucrative especially when proper research and evaluation has been done. You have to ensure that the real estate is in good livable conditions and worth the asking price and that you will not incur double expenses on doing repairs.
Make sure that once the home is back to good condition, it will still be comparable to the value of other homes in the area. There is no sense in repairing a home that sits in a row of boarded up and abandoned homes. Real estate investing in the USA should be done cautiously and only after very careful research and analysis.
About the Author:
About the author: Dario Dingwall, has been in international real estate for over 5 years has written a detailed report on
real estate markets in the USA. For a limited time, Dario has agreed to offer a free report on a high-yield real estate investment market. Get your copy by visiting his
real estate investment website.
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