The stock market appears disconnected from the economy. Bonds yield next to nothing. What’s an investor to do?
No matter what’s happening in financial markets, people always need houses. That’s why more and more investors are adding residential real estate to their portfolios.
Now is a particularly good time to invest in residential real estate. Why? Because of strong demand for housing and limited housing inventory.
In June, sales of previous owned homes rose 20.7%, says the National Association of Realtors.
Home prices rose 4.3% in the year ending in June, says the S&P CoreLogic Case-Shiller National Home Price Index.
As you start out in real estate, you face many questions and choices. You may ask:
- How to reach good decisions about whether to invest in real estate?
- Which type of real estate to focus on?
- What’s the best way to get started?
How much free time do you have to put into real estate?
To size up your situation, be honest with yourself. Figure out:
- How many hours a week can you commit to real estate investing?
- And how much capital do you have available to invest immediately?
- How much business experience do you have?
- What pace of work can you sustain over the long haul?
Don’t overcommit yourself and your time. It’s one of the biggest mistakes new real estate investors make – they quickly get in over their heads.
For example, when you work a full-time job and have a family, there’s not much free time available for real estate – just nights, weekends and holidays. Investors need time to:
- Get educated about real estate, by taking courses, reading up, and/or working with an experienced guide who helps you navigate the many ins and outs.
- Identify and explore neighborhoods you want to invest in.
- Find houses that can be fixed up profitably.
- Work with contractors who rehab houses.
- Keep accounts and do paperwork.
- Have a clear exit plan: either to flip the houses with seller financing, or rent them to tenants.
New investors usually underestimate how much time it actually takes to do all these tasks.
Creating opportunities for passive and active investors
One of the biggest decisions you will need to make is whether to approach real estate as an active or passive investor.
Active investors are hands-on, buying, fixing and flipping houses. Or they may rent out homes, working with tenants as a landlord.
Passive investors buy and sell whole or partial notes on one or more properties. They hire a property manager to work with tenants and a payment processor to collect payments on a note.
Make a well-informed decision about whether to pursue real estate as an active or passive investor. Which suits you better? Find out in minutes with our free assessment here.
Rebuilding communities, creating opportunities
Alvernia Capital Management rebuilds communities and creates opportunities for investors like you. We help active and passive real estate investors succeed.
We invest in rebuilding reasonably priced U.S. neighborhoods, creating affordable housing without displacing deserving residents.
For a simple, practical way to invest in real estate, contact Alvernia. Work with a knowledgeable guide who helps you:
- Make informed choices about your real estate education, including whether to pursue active or passive real estate investing.
- Free up more capital to invest.
- Avoid the painful “trial and error” approach to real estate investing.
To learn more about real estate investing, subscribe to our blog, which appears on the first Saturday of each month.