To actually determine your maximum mortgage amount, lenders use guidelines called debt-to-income ratios.

Share Your Opinion. (0 posts)

Business & Economy: The Westchester Business Advantage
Westchester County is going and growing in all the right places

Westchester Spotlight

Are you Unsure about Real Estate as an Investment Strategy?

Financial advisors are always telling us to invest our money and save for our retirement years. The problem is everyone recommends something different. It's great if you have enough to spread around into various enterprises, but if you have to make one choice, real estate is a win-win investment choice. There are several ways to do it, so do some investigating and find the perfect property to make your retirement years turn golden.

If you're still young and earning money you can start out slowly by buying a rental property in your home area. Fixer-uppers are a good way to go as are foreclosures. Look for something affordable that is structurally sound and free of mold or any chemical problems. With some small improvements that you can do yourself, you should be able to rent it for more than your mortgage payment. New carpet from a discount store, or sanding and finishing hardwood floors, new paint and a lot of elbow grease should be enough to make for a very attractive home. Also be sure to spruce up the yard if it needs it.

Another great option is to find a duplex. If you buy it with the right kind of mortgage (meaning good rates with an affordable payment) you can live in one half and rent out the other. That way you'll always be able to keep an eye on your tenant and if you do the financing well, the rent will cover your mortgage.

Those who have the time often buy homes strictly for the purpose of reselling them for a profit. This works well during hot market times, especially if interest rates are low and housing prices are steadily moving upwards. If you're planning on this as an investment strategy, unless you have some money put aside, it can be a bit risky. That's only because you don't know for sure when the market will slow down, making it possible that the house could sit empty for a while. In other words timing is everything, and you can't always plan on a quick turnover. The house will sell but it may take a few months. There is always someone looking for a short term rental or you could use the time for some attractive, inexpensive cosmetic work. We aren't saying this is a bad idea, just that it's not the best strategy for growing your money if you're already operating on a shoestring budget.

Lifetime real estate investing is a great way to build up your nest egg. Start with one rental house and when you can, buy another. Or you can buy your duplex and when the time is right, sell it. Each time you sell, buy something bigger and better. This will take some time, but eventually you may own an apartment complex , land, or some commercial space; or a nice mixture of property types.

Some people are just lucky, but most of us have to carefully plan our real estate investment strategy. Before you buy, research your market as to growth potential or predicted stability. Also look at your earnings and determine how much you can realistically put into real estate. Then get busy, and get that money working for you in the real estate investment market.

About the Author

Click here to get a free copy of Jeff Nelson's, "7 Tips to Avoiding the Biggest Mortgage Mistakes," a 10-page report that describes the mistakes to avoid when purchasing your new home in Phoenix, Arizona.

Share Your Opinion. (0 posts)