When it comes to making wise investment decisions, most consumers think they need to turn to investment companies or financial planners. What you may not realize is that real estate is still one of the best opportunities available and it provides the best long-term returns compared to many other types of investments. How can you get involved? What should you be doing when it comes to investing in real estate? There are a few key things you should keep in mind about real estate and how it can be beneficial to your situation.
#1: Real estate value is increasing
Over the last five years, prices in real estate have fallen significantly. This has opened the door for many homeowners to purchase homes for next to nothing compared to where prices were just a decade ago. However, prices are on the rise. Zillow, a real estate trend tracking site, states that home prices have increased across the U.S. by 3 percent on average. This is likely to continue into the future. This means that those that purchase a home today for a low price will likely see their home’s value rise over the next few years.
#2: Homes remain affordable
To couple the value benefit, consider that most real estate pricing remains very affordable compared to those high prices of a decade ago. That means home buyers can still secure an affordable home that meets their size and feature needs, as well as location. Zillow also reports that the median home price in the United States is $179,200 as of July of 2015. Prices are likely to rise, but they are still affordable.
#3: Loans are affordable
Real estate financing is widely available today. Moreover, interest rates on many mortgage loans are affordable, and they are significantly lower than they were just a few years ago. One of the key components of investing in a new home is being able to get a low interest rate. In today’s market, it is possible to find interest rates that are much lower than they were a few years ago.
#4: Real estate provides equity
For many homeowners, the need to build a savings account and have access to affordable loans is key. Yet, this is hard to do simply because personal loans and low interest credit is hard to find. However, real estate provides an opportunity because it allows the homeowner to build equity over time. Equity, when borrowed against, tends to be very affordable. It helps homeowners to have built-in credit to tap into when they need to do so.
#5: Selling existing homes is easier to do than ever
Once you secure appraisals on your existing home, you can confidently sell it on the market. The reason for this is demand for homes is up. Just like you are considering, many home buyers are present in the market and looking for affordable homes. This means that homeowners who own a property now and thought they could not sell may be wrong. In fact, in some areas, it is taking less time to sell homes for more than what they sold for just a few years ago.
#6: Buying a second home makes sense, too
For those who may not want to move out of their existing home but still want to take advantage of opportunities present, now may be the time to do so. Buying a second home now can be the prime time to do so. For all of the reasons listed above, it could be the perfect reason to make your move and invest in real estate for a dream vacation home or a home near the kids.
#7: Buying can be just as affordable as renting
In many areas, purchasing real estate and a home of your own can be better for you than renting. You may pay about the same in a mortgage payment as you do for rent. While costs like real estate taxes and utilities are higher for a home than if you were renting, in the long run you may find this to be one of the best moves for you to make long term. You’ll end up owning something.
#8: FHA loans are available
You do not have to have a large down payment to qualify for a mortgage. That’s a common misconception among first time home buyers. FHA, a federal agency, offers a variety of federally backed loan programs you can qualify for even if you are a borrower with less than perfect credit. There are still other requirements, but chances are good you will find that there is a loan out there for you.
#9: There’s less risk
If you are wondering what type of investment may be right for you, consider risk. There is no doubt there are many factors impacting risk levels across the country and worldwide. Everything from a struggling economy to political strife. What you may not realize, though, is that real estate provides a lower risk investment. It’s there for you for years to come. You can count on it to be the type of investment that can handle the ups and downs of the market, unlike many types of other investments.
#10: It affords help during retirement
Another valuable reason to invest in real estate is that it can help you in retirement, too. If you own a home and pay down your mortgage, by the time you are in retirement, that home could be working for you. Reverse mortgages are available to seniors and provide monthly income based on the value of the home, an income that remains present for the rest of their lives. Purchasing a home now, paying down the mortgage on it over time, and then using the value of the home as a tool for retirement income, can be a solid reason to invest in real estate now.
For all of these reasons, and many more, consumers should view real estate as an opportunity to secure a strong financial future. There are risks – every type of investment has them. However, those within the real estate market are much less than those experienced in other areas and the long-term outlook remains solid according to experts.