The real estate market is full of gyrating statistics. The real estate markets in some parts of the country are flourishing and in other parts the markets remain in the doldrums. First and foremost, real estate is about location, location, location. While there is always plenty of information being published about national real estate market statistics, it’s almost always meaningless at the local level. The most important information you need is about the local market you are investing in. Right down to the neighborhood level.
Never Invest Until You Are Ready
If you missed out on the super low prices of 2012 or the super low interest rate of 2013, don’t fret. You were most likely not ready to invest. It could be either that you weren’t financially ready or that you were unsure of the direction that the market was headed in. This year could be the year that you are ready to invest.
It takes more than only having the down payment to invest successfully in real estate. Your due diligence of an investment needs to fully consider hidden costs as well as future costs. This is the reason that the more sophisticated commercial lenders typically require buyers to have substantial financial reserves. Terms vary but having six months of mortgage payments in reserve is common.
Real Estate Investing is a Marathon
While residential real estate appreciation is expected to slow in 2014, it’s not coming to a grinding halt. 2013 was close to a record year. 2014 is returning to a more normal rate of appreciating values. A recent survey of 106 experts concluded that residential values will hit a new high by 2017. With interest rates expected to remain in the 4.5% to 5.5% range, investing during 2014 remains an attractive proposition to cash in on future appreciation.
Accumulatively, the panel of experts expects housing prices to appreciate 23.7% by 2017. While there are get rich quick strategies for real estate investing, the most reliable strategy is getting in for the long haul appreciation in value. Coupling that with decent positive cash flow is what makes real estate investing one of the most predictable investment strategies.
Negative equity, high demand, and low inventory will remain the driving forces for real estate for at least 2014. These factors say that real estate remains under valued, which is the driving force for future appreciation. Currently, the more important factor to watch is the negative equity. Negative equity is quickly fading into the rear view mirror. As it does, more people will be capable of putting there properties on the market. That will slowly increase the inventory for sale. As inventory increases, prices will stabilize. As prices stabilize, appreciation will decrease.
2014 may not be your last chance for a decent real estate investment but it might be your last chance to get in before appreciation slips to parallel inflation. When that happens, real estate becomes a riskier investment because it is very illiquid.
However, only invest in real estate when you are ready and have performed a thorough due diligence on both your finances and the property that you are considering.
For more insights into real estate investing strategies, follow this link to another revealing article: http://realtybiznews.com/real-estate-investing-fundamentals-strategies-for-2014-part-two/98723505/.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.