Real Estate Investing FAQ

Any real estate investment will succeed do to two factors, cash flow and appreciation. Cash flow is the amount of income the property brings due to rentals or other kinds of income. Appreciation is the change in the price of the property.

Real estate investing is subject to many pitfalls. Housing markets can change quickly. Rental prices can change drastically as well. A house can need dramatically more maintenance or repair than expected. It is recommended to do considerable research before engaging in this kind of investing.

Leverage is a term that is often indicated as a benefit of real estate investing. It refers to how much of your own income you are having to invest to purchase the property. If you are only putting 10% down, you will be seeing appreciation on 100% of the purchase price, but making that on am much smaller investment. In this case if it appreciates 1% per year, but you have only invested 10% then you are seeing a 10% growth, because you are levered 10 times.

Real estate agents are a tricky subject, because many are worth their weight in gold, while some will try to do as little as possible to earn their commissions. Most of the time an agent will earn his or her money, but you should not be afraid to push them to do what you feel is right.

Investing in your own home can be a good investment, because it also provides the basic need of housing. Instead of paying rent you can hopefully purchase an asset that will appreciate. Real estate however can fall precipitously and can require many unforeseen expenses so should not be entered into lightly.