Real Estate Investment – Mega Mistakes Made by Newbies

The real estate investment fever is more contagious than Swine Flu. Every single day, a myriad of newbies enter the market, hoping to make it BIG. The rush to real estate investment has gained an increased momentum after the stock market began going in one direction: Down! Many of these real estate newbies are actually experienced connoisseurs of the stock market. After losing their franklins in the stock market, they are now trying to earn their money back in this area just because they have ‘heard’ that real estate is very promising. I have met many of these newbies and here are five common mistakes they commonly make;

1.) A Mega Mistake That Deserves the Electric Chair Treatment: Stock Market Mentality

The stock market crash flushed a 13 figure amount ($7,000,000,000,000!) down the drain. After such an expensive lesson, you would naturally be inclined to think that these investors have learned something. But no! They continue to reiterate the same mistake- hypothesizing what happened the last week will happen this week. 90% of the newbies that I have talked to, want to give real estate investment a shot because a certain friend’s father or an uncle’s brother-in-law earned a big buck from it a few years ago. Now seriously doesn’t this sort of reasoning deserve a couple of trips to the electric chair?

Just like any other business, real estate investment also has some degree of risk attached to it. What substantially increases this risk is when one enters the market with the mentality of making an immediate gain. With such a mind-set, you aren’t making an investment, you are gambling! Real estate appreciation occurs over a longer period of time. If you invest in property, considering sticking with it for 5 to 10 years, the chances of you coming out on top are very close to a 100%! Of course, you can also aim for a shorter term investments such as 6 months and 1 year. But with such an investment your timing needs to be absolutely right.

2.) A Mega Mistake that Deserves 5 Canes Every 10 Minutes: A Blind-Fold Real Estate Investment

Being naïve, newbies scramble for properties based on pseudo advice! Such a mistake will turn your hundreds of thousands of dollars to just thousands. Newbies should never put their money into a property because someone told them to. Get educated. Know how to differentiate a good deal from a bad one. Before you invest money into actually practicing real estate, invest your money in learning the theoretical aspects of it. Success in this field is directly proportional to the amount of knowledge you have. Picking an investment opportunity isn’t like putting up a map on the wall and shooting darts at it. You aren’t choosing a holiday destination. Your decision could substantially Increase or decrease your capital. Be wise!

3.)A Mega Mistake that Deserves Water Boarding: Zero Cash Reserves

Survival in the real estate market is heavily dependant on cash flow. For you to be able to stay within the market for a good length of time, you must have cash reserves in place. Even a fifteen year old school drop-out can buy a property. The difficult part is when you have to manage a negative cash flow. If you can successfully do this, there is no doubt that you will be the next Donald Trump! Having effective cash flow management prevents you from making decisions that aren’t logical or those that don’t give you max returns on your real estate investment. Here is what you can do when you have healthy cash reserves;

· Instead of selling ‘now’, you are able to wait for the market to pick up further demand
· You don’t give your properties to less than qualified tenants.
· Instead of temporary repairs, you are able to give your property an over haul treatment consequently raising its value even further.

It is quite obvious that this wouldn’t be possible without some back up money in your wallet. This is a very critical point for newbies to take note of. Real estate investment is perhaps the next decision you could ever make provided you are equipped with the know-how. Don’t let the market rule you. You should rule the market!

Buying Real Estate in Phoenix: Best Tips for Phoenix Market

The housing market of Phoenix is really hot for the past few months! With a price increase of nearly 35 percent from the last year, Phoenix has acquired number one spot in price appreciation as compared to the whole country. According to the Arizona Republic Valley Home Value Report, as many as 75 percent of the houses in Phoenix have shown an improvement in price and Santa Barbara California is the only city to get ahead of Phoenix in terms of price increase. Most of the economists agree that 2013 will be a potential year for any investors planning to invest in Phoenix. So, are you interested in purchasing property in Phoenix? Hold on, here are some important points that you should consider before getting in the real estate bubble again!

Picture from the Past: Why the real estate crash happened at all?

The property market crash in 2007 left the investors wondering and shocked with its after effects. But, if seen logically, there were a lot of reasons that fueled the crash of the real estate market. Starting with loose lending practices and the option to get 100 percent financing for the house. According to experts, loose lending practices were the biggest reason for the price appreciation and foreclosure crisis that followed in 2007 onwards. In addition to it, multiple cash back schemes were announced during this period which motivated buyers to get property in the first place.

But, the current boom observed in Phoenix market is out of different reasons and for the first time in last five years, we can say that this change will last for the years to come.

What fuelled the rise of the real estate market in 2012?

If we listen to the experts, declining foreclosure sales are one of the major propellants behind the rise of house prices in Phoenix. Resale of foreclosed and distressed properties accounted for 13 percent of the overall sale, hence allowing the median price to go up and increasing the overall price of houses throughout Phoenix. In addition to the fall in a foreclosure sale, Phoenix redevelopment has taken off nicely, attracting more investors towards the Phoenix estate market.

What can we expect from Phoenix real estate market in 2013?

This is a million dollar question for investors eyeing Phoenix real estate market in the years to come. The recent increase in prices is highly motivating although the prices are not as high as that of 2003, but the chances of improvement are quite bright in 2013. Further, the strong economy of Phoenix will help in sustaining this price appreciation in the years to come (although at lower rates). Phoenix has a lower unemployment rate as compared to most of the cities in the country and the increase in sale of house seems to be logical for now. For anyone looking to invest money in real estate, Phoenix is the perfect choice.