Building Wealth Through Real Estate
Posted by David Rosenfeld on Mar 28, 2013 - 5:56:47 PM
LOS ANGELES—As the economy improves and the real estate market gets stronger, many are now looking to buy property with an eye toward building wealth. With all the indicators showing strength in the market, it’s a great time to buy especially for those seeking to rebuild their nest egg by investing in property.
It’s been a long five years since the market has been as strong as it is today and many investors are recognizing the value of real estate as a solid investment. It’s great news for buyers and sellers alike and it’s also a positive sign for the economy overall as more are feeling it’s time to invest in their future and not hang on to their cash for fear of a downturn.
Investing in real estate as part of a wealth building effort is always a great idea as long as you have the funds and a solid strategy based on today’s market. Buying damaged or distressed properties in order to “flip” them and make a quick profit after making slight improvements should not be a part of your strategy. Despite what reality television shows say, “flipping” a property is a risky business that can have dire consequences if you are inexperienced.
The reality is that flipping is not as easy as it seems. You must be prepared for the demands of rehabilitating a troubled property. It’s definitely not for the faint hearted or those hoping for a quick buck with minimal effort. Knowing your costs, being aware of the amount of time you can devote to the work, getting the financing, and identifying the property are just the beginning. I strongly urge those looking into house flipping to look elsewhere unless you’re prepared and committed to this effort.
Repair costs can make or break you when it comes to house flipping so that’s why some of those that do this for a living are swinging a hammer on the project and working away as much as they can because this is a full-time job.
A more realistic goal of building wealth through real estate is by buying a property that you and your family can occupy or one that you plan to rent out as you build equity. With the advice of a real estate agent, you can start by buying one property at a time as you begin your strategy for the future. Within a few years you may be able to purchase a second property thanks in part to the cash flow from your rental property or home equity.
It takes time to build wealth as you can see, but a sound real estate investment strategy isn’t one based upon a quick turnaround. It’s about making solid decisions and taking the time to ensure that the property you’re interested in meets your particular needs.
But in the end, purchasing investment properties is a calculated risk so the more research you do the better the outcome will be. Do your due diligence when it comes to the property, its costs and even local ordinances and regulations on rent control and other related issues.
It’s also important to determine whether you’re ready to be a landlord. Thankfully, there are resources that will help you gain intimate knowledge into what it takes to be a good landlord and a good investment property owner. The Apartment Association of Greater Los Angeles and other such groups offer courses on investment properties that include the do’s and don’ts of dealing with tenants and problems.
No matter what your goals are, whether it’s buying your first home or looking for an investment, it’s a good time to consider real estate and the rewards and possibilities it offers you and your family for the future.
David Rosenfeld is a Real Estate broker and president of Advantage Real Estate, a Real Estate and investment firm in Santa Monica, and a Rotary Club member. He has more than 20 years experience in commercial and residential property investments and financial counseling. He can be reached at 310 450-4488, at firstname.lastname@example.org at www.advantage-realestate.com.