Buying an house is not an investment, or is it?
According to Peter Schiff, a financial news commentator, stock broker, author, economist and president of Euro Pacific Capital, buying a house is an investment in some form, but not like how most people describe real estate investing. Here’s a synopsis:
How to Make Money in Real Estate
1. Rental Income Investor: the act of buying property for rental income. (Multifamily properties (apartments), single family homes, commercial real estate for rental income). The ability for one to make money from rental property is directly related to the affluence of a an area or community. In a recession, the tenant’s ability to pay is questionable. In fact, in a recession, landlord’s or future landlords should be cognisant of possible income declines in the marketplace due to job loss. High unemployment in an area might dissuade you from “normal” rental increases.
2. Developer: Buying raw land and constructing a property on it albeit residential or commercial real estate/buildings. As a developer, you are adding value to the land based on the work and effort you put into it. But in a declining market, where it could be possible to buy an existing structure for less than the costs of constructing it, it may not make sense to continue developing.
3. Buying a house or property from a builder, a bank or property in short sale. If you have the opportunity to buy land plus property for less than the cost to build it, it can be a smart investment over the long term as oppose to the short term. There is no guarantee that the property will appreciate in the short term, but having a long term strategy increases your odds. An individual who makes money this way i.e. someone who waits for prices to rise is not necessarily an real estate investor but rather a real estate speculator. As a real estate speculator, you are banking (betting) on prices increasing based on functions or forces beyond your control. Changing demographics i.e. the lost of a big employer in an area or a new employer moving into an area an affect value. These are the types of external factors a buyer, investor, seller has no control over.
4. Maintaining, updating and modernizing a structure or property adds value.
The simple act of buying real estate is not a investment decision. Everyone needs shelter and the decision to rent or own is a lifestyle choice. The best way to make money in the future is to save and invest it wisely.
Post By Audeliz Angie Perez (160 Posts)
Angie Perez is a NJ Circle of Excellence award winning real estate agent for Weichert, Realtors in Edison. She sells anywhere from 12-25 houses per year on a consistent basis since 2005. Ms. Perez is primarily a buyer's agent on 60% of her real estate sales where she represents rental income investors, first time home buyers & trade up home buyers of 1-4 family homes within specific towns encompassing 4 NJ counties: Union, Essex, Middlesex and Somerset County. Many of Ms. Perez's clients appreciate her ability to negotiate favorable real estate deals for them. Many of her clients commented that her research abilities, her honesty, her knowledge of local market trends and her proficiency to manage multiple real estate transactions from start to close are some of the reasons why she was hired as their agent of choice. Please call, text or email Angie Perez to ask if she lists or sell in your town. If she can not help you, Ms. Perez would be more than happy to help or refer you to someone who can.
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