Investing in Real Estate Can Be Profitable

Mortgage News from Quicken Loans

Purchasing real estate is a good way to invest your money and provide yourself some increased financial security. But, if you're new to real estate investing, you may ask, "What is real estate investing all about? What are the benefits to me and how can I get started?"

What is Real Estate Investing?

Real estate is a tangible, cash-generating asset, and appreciates in value. It's not something that can quickly lose value; it remains an excellent, long-term way to invest your money. Real estate investing can provide good return on your investment in the form of increased cash flow through home appreciation and tax-deductible mortgage interest. (Please consult with your tax advisor.)

If you're interested in investing in real estate, you can benefit greatly by using your mortgage to build wealth. There are two ways you can accomplish this:

Renting

You can maximize your return-on-investment by finding excellent properties that can be purchased at a great price. With today's attractive mortgage rates and the number of homes available on the market, real estate investing is an ideal financial opportunity. Some properties may need more work that others, but with a little work, it can be turned into a nice rental home. Investing in rental property allows for a steady and reliable stream of cash flow from the rental payments since there is a high occupancy demand for a well-kept and reasonably priced rental property. Theoretically, the nicer the place, the more you can charge in rent.

Flipping

Perhaps you're not the type of person who wants to deal with being a landlord and the work that goes along with it. So if renting is not for you, you can also "flip" your property by purchasing, repairing and reselling it for an attractive profit and could prove for you a better alternative to renting the property out.

How to Start Investing in Real Estate

If you're going to invest in real estate, here are some basic tips that will help you become a better investor:

  • Do your research: Educate yourself about which markets offer higher appreciation and/or resale value. Find out how much you can afford before you start looking at homes, so that you don't waste your time looking at homes that are outside your price range. There are many home affordability calculators available online that can help you do this.
  • Find a reputable real estate agent: A good real estate professional can help you gain a more concise picture of where your interests should lie. Make sure they can answer all your questions knowledgeably.
  • Contact a reputable mortgage lender: A good mortgage banker can help you determine which mortgage loans fit your situation and answer any questions you may have. Whether you decide to rent or flip your investment property, there are some excellent home financing options available, including jumbo loans and loans that offer incredibly low monthly payment options. A home loan expert can help you determine which financing options are best for your particular investment interests.

Investing in real estate is a great way to increase your profitability and cash flow. Understanding how to invest in the market and developing a solid plan of attack before you invest is important to be a successful real estate investor. When you find what works best for you, you'll be that much more prosperous!

This article is reprinted by permission from Quicken Loans © 2006 Quicken Loans Inc. All rights reserved.