In 2006, real estate was a hot area for investment in many parts of the country. Prices went up, and credit was easy. Liar loans and mortgages with adjustable rates allowed people to buy more homes than they could afford. Then, the market crashed. Foreclosures increased rapidly, and many people found themselves underwater with their loans. They owed more than their homes were worth. There is a real fear that American real estate is in another bubble. This is why it’s important to be proactive in protecting yourself from the possibility the bubble will burst.
Don’t Buy What A Bank Offers
Most realtors will want to see pre-approval for a loan that shows how much a buyer can borrow. It’s not a good idea to search for a home at the maximum loan amount. Buying a house at a lower cost will make the monthly payments easier to make.
Put Money Down
Some government programs allow people to buy a home with no money down. Others, like the FHA loan, require a mere 3.5% down. This is a dangerous loan if the market collapses. Coming to closing with a 10% or 20% down payment provides instant equity and makes it less likely that you’ll wind up underwater with your home mortgage.
Situations change unexpectedly, but those who plan to move within five years should avoid buying a home. Because most of the payments go to interest in the early years of a loan, equity will be difficult to build in the short run. Closing costs and realtor commissions can come with financial stress. Therefore, unless you plan to stick around for at least five years, renting is usually a better option.
Have An Emergency Fund
Having some money stashed away is a great stress reliever. That money can also go toward paying down a home that winds up underwater during a housing bubble. Most experts recommend having three to six months of expenses available. An emergency fund can alleviate the need to use home equity or a credit card for an unexpected expense.
Housing bubbles can lead to higher rates of foreclosure. They can also erode the wealth of many households. Taking these steps before purchasing a house can make it less likely that a family will be hurt badly if a housing bubble bursts.
Airbnb has had a huge impact on travel accommodations, and those who have chosen to stay in an Airbnb may wonder if hosting an Airbnb rental is a good investment. Becoming an Airbnb host is appealing in several ways, including the ability to add to your income without being an expert in real estate. However, hosting an Airbnb may not be right for everyone because there are some disadvantages to it as well. It is important for potential Airbnb hosts to research and learn if hosting an Airbnb will be a good decision and investment for their life.
The first thing potential Airbnb hosts should learn is the difference between an Airbnb and traditional investment property. Airbnb rentals are short-term with several different renters over time, and traditional investment properties are for tenants who plan to stay for a very long time, even years or decades in some cases. The next thing potential Airbnb hosts should do is research the market to find out if any outside circumstances are causing it to change, such as the recent COVID-19 pandemic. The pandemic had a huge impact on the Airbnb industry by creating quite a decline in customers in 2020. However, there has been a recent surge in Airbnb customers who are becoming more comfortable with the pandemic, trying to find ways to stay safe and have a fun vacation at the same time. Those people find comfort in an Airbnb that is located in a travel destination place that is both secluded and desirable.
Potential Airbnb hosts must also consider the legalities and expenses that come with renting out an Airbnb, including maintenance, furnishing the property, extra amenities like Internet and entertainment subscription services, utility bills, home insurance, and specific Airbnb laws in each state. On the upside, it is possible for someone to have an Airbnb almost anywhere since many people use Airbnb for business and events that could take them anywhere in the country instead of just the standard vacation spots that were once the norm. If potential Airbnb hosts price their rental correctly and does their best to make their rental appealing to potential tenants, an Airbnb can be a very smart investment income.
A legislative process, zoning allows the government to divide a property into different zones for different uses. These laws regulate the construction and use of structures on the property. Zoning laws are important to determine whether the types of structures that can be built on a property are compatible with its surroundings. They also determine if an existing structure can be repurposed or if a new one can be built. Understanding the various aspects of zoning is important to ensure that the necessary changes are made to improve the appearance and function of the property. Even if these aren’t changes to your property, your neighbors might try to make these changes and, consequently, negatively affect your property.
To protect the health, safety, and general welfare of the people, zoning laws are designed to ensure that the use of land doesn’t affect the people in negative ways. They also try to minimize the impacts of land use on the people by separating incompatible uses and ensuring that the properties’ value is protected. Developing a comprehensive land-use policy allows for the orderly development of the city. Aside from protecting the health, safety, and general welfare of the people, zoning laws also ensure that the city has adequate public infrastructure.
Cities are generally focused on developing industry as a way to stimulate economic growth as well as developing areas for residential use. However, if the two are developed side-by-side, this can cause upset amongst residents. This is the task of zoning, a process imposed by the government that aims to make both parties happy.
The goal of zoning is to create a set of rules that will allow the community to develop a compatible and sustainable use for their land. After considering the various factors that affect the development of the city, it then divides the city into multiple districts. These laws then regulate the use of structures within each district, as well as the types of buildings that can be built within each zone. Because of the law’s recognition that life is not always black and white, zoning laws can also provide the government with the flexibility to accommodate the changes in the city’s development. Although it’s possible to decide for yourself what type of project you want to develop, given the varying jurisdictions of the city and the complexity of the laws, it’s important to consider taking the advice of a knowledgeable individual.
There is no one-size-fits-all approach when it comes to investing in real estate. It can be overwhelming for new investors, especially if they don’t have the necessary resources. Most people who enter the real estate industry have limited backgrounds and experiences. This makes it hard for them to see the big picture when it comes to investing. It is important for investors to learn from other people in the field to help them get a better understanding of the multiple aspects of investing in real estate. There are plenty of books that cover the various aspects of real estate for people who have little to no experience. These are some of the most effective and useful tools that can help new investors.
Rich Dad Poor Dad
This is a great entry point for anyone interested in learning more about investing and financial opportunities. It doesn’t focus on real estate investing but rather on how to think about finances in a way that’s easy to understand.
The ABCs of Real Estate Investing
This book is an essential addition for anyone who is interested in learning more about investing in real estate. It provides a variety of strategies and techniques that will help them find and manage a property. It also covers the various aspects of property negotiation.
The Book on Rental Property Investing
This book is a must-read for anyone who is interested in learning more about investing in real estate. It provides a variety of strategies and techniques that will help them find and manage a property. It also covers tax strategies and the biggest mistakes that new investors should avoid.
Mastering the Art of Commercial Real Estate Investing
While real estate investing books often focus on vacation and residential property, commercial real estate can be very profitable for experienced investors. This book talks about the differences between residential and commercial real estate. It also provides a set of rules that will help investors make the best decision when it comes to buying a property.
Buy It, Rent It, Profit!
This book is valuable for anyone who is a property manager or landlord. It will give you a deep dive into how you can maximize your time and money. It also covers the various legal forms that can be used to manage a property.
Timing the Real Estate Market
One of the most overlooked factors that investors often fail to consider when it comes to investing in real estate is the timing of the market. This can affect the amount of money a property will make and the trends that will affect its future. Having a good idea about how to predict the market will affect your investment and can help you avoid getting caught off-guard.
Whether you’re an investor or a buyer/seller, knowing what moves the real estate market is key to maximizing gains and getting the best deal possible. One of the key factors that impact real estate value is seasonal changes. Buying or selling propery in wintertime can be a difference of night and day when trying to sell the same unit during summertime. Here are three ways on how cooler weather can affect the real estate market.
As with any financial market, the real estate market is dictated by supply and demand. There are seasons of the year wherein buyers outnumber sellers, during which time it becomes more challenging to purchase a property within your desired budget due to the bigger amount of bids coming in. Summer is typically the busiest season of the year, with people buying more aggressively than any other time of the year. Come wintertime, the demand subsides and so does the market prices. This makes it a great time to buy real estate but not so much to sell one.
Different Staging Process
Staging a home that you want to sell during wintertime will involve slightly different design elements than when you’re staging a home during summertime. For starters, you’ll want to crank the furnace or boiler up to keep the temperature indoors nice and cozy for home buyers who come in to check the property. Boosting curb appeal during wintertime can also be more challenging since there is less natural light in the day and less vibrant colors surrounding your property. You can boost your property’s curb appeal by adding tall grass and purple-colored cabbage plants for some background contrast.
Lower Realtor Costs
With a lower demand in housing, you have more wiggle room both as a buyer and a seller. Realtor costs, for instance, can be negotiated to reflect the seasonal freeze in demand for their services. Contractors may also offer lower pricing for their services to get more business in a time when demand for work is seasonally lower.
Regardless if you’re a buyer or a seller, patience is perhaps the most important value to succeed, especially in a market like real estate where seasonal changes impact valuation. Simply being patient and timing your purchase or sale can net you savings or profits of 5-10 percent easily.