Many were burned in the 2008 real estate crash and are still suffering to this day. When mentioning real estate as a way to invest money and build equity with which you can either pay off loans or invest into other project, there are those who will flinch and react poorly. Based on their own experiences or those of their family and friends, they are far from trusting that real estate investment can be anything but a way to gamble away your life savings, credibility, and health.
However, following the turn of events in which many people lost their homes and had to declare bankruptcy, many things have changed in the American financial landscape. In order to protect the economy, the government and major institutions like banks have created new rules and regulations to stabilize the market. Though this means that it is more difficult to buy a home these days, it makes real estate a safer investment for everyone.
However, if you are still sceptic about whether real estate is a good idea, there are extra precautions you can take when contemplating your dive into the market:
- Buy Something You Like
This might sound like strange advice, but it’s important. If you like the house that you bought and live in, even if the market has a small dip, you aren’t panicking since you are there for the long run. Yes, it is a long-term investment, but during that time you are also getting value from your property because it is your home and you live in it. If you are purchasing a rental property, do you like it enough to want to live in it? If times get rough and there’s a change in the market, would you be able to move here to save yourself some money and risk? Consider it.
- Purchase in a Strong Area
Though areas with strong and reliable real estate markets are usually more expensive than ones with little potential, if you are looking to minimize your risk, you might want to stick to what’s already doing well. It’s true that you can see a greater return for a smaller investment in an area deemed to be “up and coming”, but there’s always the risk that the area won’t quite get there in the time frame you planned for.
- Buy International
If your previous experience with American real estate is keeping you from wanting to try again, maybe consider a different geographic area to invest your money. Whether you decide to buy a villa in Costa Rica and rent it out whenever you aren’t there or find something closer in Canada, both could be a sound and rewarding investment. Before taking the plunge, you will have to do some research on the rules and regulation surrounding the situation, however there is an abundance of Certified International Property Specialists out there and in Canada you’ll find Montreal lawyers who specialize in commercial law, condo law and real estate issues.
- Keep the Payments Manageable
Whatever you do, make sure that the mortgage payments that you will be making monthly will be manageable, whether you or a tenant will be footing them. Never buy a rental property where you can’t command a rent high enough to cover the mortgage and your expenses. Even if you find something quite lucrative, make sure that you have some savings set aside in case there is a gap between paying tenants or you lose your job and won’t be making an income. A few months of mortgage payments in a savings account is a safety precaution that can buy you time when faced with issues. Don’t ever let yourself feel like you are struggling. Instead, aim for comfort!
- Work with Trusted Professionals
As skilled of a researcher you are, there is a reason for which there are full-time financial advisors, lawyers, mortgage specialists, and real estate brokers. They all have years of training and experience to offer you. Take advantage of your investment team and ask them as many questions as you can, running hundreds of scenarios past them. See which recommendations line up between them and hopefully decision-making will become more clear. Communicate your fears and limitations to them, and if at any point you do not feel comfortable with where this is all going, tell them. If you find that you don’t trust them, ask a friend or family member for a different recommendation or referral.
Investing in real estate is a sound investment in many places in the United States and abroad. If done properly, in a few years you can see your equity rise, giving way to financial opportunities for you.