The real estate question
I seem to attract the real estate inquisitive. Perhaps the most common question I am asked is this: Is real estate investing a smart idea?
“It depends,” I say, as a million questions stream into my mind. Where are you looking to invest? What property type? Fixer upper? Long hold or short? Is the seller motivated? What’s your credit like? Can you put 10 % down? It just depends. Many of us, myself included at one time, tend to group real estate into this big, singular blob–but real estate is so multi-faceted.
Here’s one example. People tend to talk about rehab investing as one category; shoot, I even do this from time to time. However, cosmetic rehabs and gut rehabs are entirely different. One is a major project, the other relatively minor. (Sometimes cosmetic rehabs turn out to be gut rehabs–but I won’t get into that right now. A little off topic). I use this example because I like rehabs; potential for high return is there.
It’s certainly not like it was during the boom. All sorts of people were making money rehabbing without much research or strategy. The market’s not like that now; it’s more balanced. Now it takes research to make money; you need to know what you’re doing and why. But the potential for high return is still there and many financing programs are emerging to encourage rehab investing. For example, I found one site www.spec-loan.com, with a great hard money rehab loan. (Go to the main site and click on new hard money loans on top).
“There’s still opportunities out there,” I’ll tell the real estate inquisitive. “It’s about location. About the seller. How motivated are they? It’s about you’re entrance and exit strategies. You should know both before buying. It’s about so many things. But there’s still people making money out there. Every type of market caters to someone.”