How to Jump Over The Most Common Real Estate Pitfalls

Is it really smart to invest in real estate? Who can know for sure? Like any forms of investment, there are risks to consider. When the good outweighs the bad, then perhaps, putting money in real estate is a good way to start building up your investment portfolio.

How can we know which way to go? Real estate experts have identified major pitfalls to avoid if investing in real estate is what appeals to you:

Do not bank on intuition.

Intuition is defined as “hindsight”, or an inherent “inner warning”, that oftentimes does not veer towards the positive but leans on the unexplainable feeling of doom. Most people would sell their homes based on a pessimistic feeling that the real estate market will soon crash, or the long-perceived real estate bubble is beginning to burst, hence the sooner they sell their properties at prices they can still command, the better.

Most likely, the worse case scenario never happens. Panic paralyzes the mind from thinking logically through a situation, thus, past experiences are forgotten. When real estate prices do slide, they don’t happen overnight. Unlike stock market positioning where prices can nose-dive drastically, real estate values may only suffer a decline, but not a total burn-out. Those who sell their homes with the prospect of making a profit on it while they still can, and purchase another, when real estate prices slide are heading towards being homeless, or into rental homes themselves.

Look at the odds: selling your home will displace your family for a while, it will cost you your agent’s commission, new mortgage rates may even be higher than the previous ones you were paying, the inconvenience of moving and leaving a familiar neighborhood, including other attendant costs. In the end, your calculator will register a deficit rather than profit!

Keep a discerning mind; do not believe everything you read.

That value of real estate properties will always go up is more of an illusion, rather than fact. This line of thought is dangerous as it wafts “speculative” investing – a financial stratagem that can be potentially profitable but very risky. This can imperil your good investment approaches. Real estate agents are moved by the prospect of earning commissions, naturally, they will outsell one another by sales pitches that can close the deal.

Quandary with Rentals.

Purchasing properties with the prospect of renting them out is sound, however when this is done during an economic slump, this may jeopardize your investment.

When real estate foreclosures are high, some investors take it as a good sign for renting out properties. Some may experience demand, but oftentimes people move away when they lose jobs. By the law of supply and demand, when there are few renters, rents will plunge.

Avoid risky loans like a plague!

Mortgage loans come in many options, can be all attractive, but caution should be exercised. As in all things, not everything that sparkles is gold.

Interest-Only Mortgages don’t demand payment of the principal while other mortgage options may require regular payment of the principal, or no payment at all during the early years. But interest rates can increase monthly and the increase can cut deeper on your mortgage. If sufficient payment is not made, your total mortgage loan will cost you more than what you home originally costs.

Keep your investment straight and you have more to keep.

Funding your other investment portfolios with the equity on your home is risky. Same is true with financing second or third mortgages on a property. In the event of payment defaults, equity on such property shall satisfy the loan taken from the first mortgage lender; and any remaining amount, shall be used to satisfy obligations with the subsequent lenders. This, however, rarely happens.

Study. Probe. Evaluate. Do not speculate.

Real Estate Investment is flourishing – a sign that it is a profitable venture. No wonder, real estate industry remains a formidable choice among those who want to get a crack on the fortune pie. Having identified the common pitfalls in real estate investing will narrow down the margin of those who ventured but lost, and jumpstart the prospects of those who want to make it big.

Helen L. Erickson

Sarasota Real Estate

How to Gain an Online Real Estate Education

Without formal training students will have a hard time entering the real estate industry. Online accredited colleges and universities provide students with a variety of degree programs that prepare them for a career in the field. With formal training students are able to work in various parts of real estate.

The selling and purchasing of a house is not a simple process and many individuals are involved in finalizing a sale. The main careers that are available to students that complete a degree program include:

  • Brokers
  • Appraisers
  • Inspectors

Each career option plays a different role in the transaction of buying a home. Brokers work directly with buyers to purchase a home. Appraisers estimate the worth of a home and inspectors guarantee that a home complies with all building regulations. Online training programs offer all the necessary skills to enter each career. Students can gain a real estate education by completing a degree program and earning state licensure.

Degree programs are offered at the associate’s, bachelors, and master’s degree level. All educational levels prepare students to become trained professionals. Associates degree programs teach students the basics of the field. A foundation is gained that includes the legalities and finances of real estate. Students that complete a bachelor’s degree program learn the practices for commercial, residential, and rental properties. Marketing and sales education and investing courses are examined as students learn the ins and outs of real estate law. Most online programs are available at the undergraduate level. Master’s degree programs are only offered by a small number of online schools. Advanced concepts are explored in a master’s degree program as students learn about the theory and procedures behind real estate. Each level of education allows students to choose concentrations. Training divides learning into core and specialization classes. Common concentrations offered online include:

  • Appraisal
  • Property Management
  • Consulting

Specific training focuses on these areas and more to give students a complete understanding of the field. Business mathematics, legal aspects, financial institutions, mortgage markets, construction operations, and more are subjects covered in each level of education. Depending on the concentration chosen students may learn advanced practices. For example, students that are working on a consulting concentration can expect to learn finance management and capital markets at a deeper level. Education at every level trains students to confidently step into the next phase of schooling, which is the licensing exam.

To officially gain an online education, students will have to prepare and successfully pass a licensing exam. The national exam covers all foundational areas that are learned inside a degree program. Licensure is gained from the Real Estate Commission. Each state licensing requirement may be different so students need to be sure to contact their local commission to find out requirements.

Training programs can be completed from the comfort of home when students enroll in an online school. Explore the different concentration options and begin the process of gaining an accredited real estate education online. Full accreditation is awarded to quality educational programs by agencies like the Distance Education and Training Council (http://www.detc.org/) to quality training programs that meet certain requirements.

DISCLAIMER: Above is a GENERIC OUTLINE and may or may not depict precise methods, courses and/or focuses related to ANY ONE specific school(s) that may or may not be advertised at PETAP.org.

Copyright 2010 – All rights reserved by PETAP.org.

The Importance of Getting an Education in Real Estate Investing

With the current economic woes still playing a key part in the condition of the real estate industry, a lot of people who are looking to invest need education in real estate investing. The industry can be potentially very profitable to an investor, but the importance of learning about how to successfully invest in properties can certainly save and gain lots of money for investors. There are several ways to go about gaining the education needed, including courses, seminars, lectures, and personal tips from experienced investors.

Several online schools and mentoring services exist to help people get a better education in real estate investing, allowing them the opportunity to gain an understanding of all the risks and rewards it brings. Professionals all over the Internet are offering to give hopeful and aspiring investors the best advice possible in investing and trading to make money. Much of the education in property investing stresses the need to stay ahead of the curve, as it is like all other businesses in that competition can be fierce and falling behind can be very costly.

Those who are interested in getting into the business of property investing can benefit from educating themselves in the business, whether informally or formally. Education will hone their ability to assess risks and minimize their losses. With education and knowledge, they can quickly identify opportunities and act appropriately when those opportunities arise.

Any aspiring property investor stands to benefit a great deal from becoming familiar with terminology, as well as reading as much as he or she can on property investing. Simply put, education will help any investor sound and look professional. After all, would you trust an investor who does not seem to know what he or she is talking about or does not even look professional?

It is also important for any investor to have the aptitude to learn and use new technology related to the business. Technology and software are invaluable tools in helping any investor to make up-to-date and informed buying and selling decisions.

Several different strategies exist for maximizing the returns from investing in real estate, and the more you learn the better chance you have of returning a profit. Nearly all education methods will stress that having as much information as you can possibly handle about the real estate market will make it much easier to target which investments are the most well founded.