What to Consider When Investing in Real Estate

Real estate can be an extremely profitable investment. It can also be an extremely volatile and risky investment.  Along with getting sound advice from your attorney, financial advisor, and real estate professional before investing in real property, there are also some practical considerations that should be taken into account before investing in real estate, including, but not limited to, the following:

• Your finances – how much can you afford to lose? There are no guarantees in real estate, so never invest more than you can afford to lose, or at least do without for a considerable period of time. Also, if you plan to renovate a property, double both the initial cost estimate and the initial time estimate and then make sure you can live with both.
• Your profit timeline – for most people, real estate is a long-term investment. Real estate appreciates, on average, about 3-5 percent a year. Over 15-20 years, that can turn into a nice nest egg. However, if you want a quick profit, you will have to “flip” the property, which is a much more hands-on form of investing.
• Current market – take several months to thoroughly study the current market before you even consider making an offer on a property.
• Property taxes – in real estate, location is everything, but property taxes are often a close second. Most buyers will place a great deal of importance on property taxes as well as what those taxes are paying for.
• Zoning – if you are considering investing in commercial property, be sure that you understand the current zoning of a potential property, as well as that you are aware of any movements aimed at changing the zoning, or any current plans to do so in the near future.
• Schools – for residential property, school systems are critical for many potential buyers. Often, a smaller outdated home in an excellent school system is far more valuable than a larger, renovated home in a not-so-great school system.
• Future trends – recognizing future trends is usually what separates the highly successful investor from the rest of the bunch. Look for catalysts that indicate a neighborhood is turning a corner for the better. A catalyst could be an anchor store, a grant from the city, a new school, or anything else that will eventually attract the buyers you want.

Most real estate investors will tell you that success is mostly hard work and taking the time to thoroughly study all angles before making a move—and then a little bit of instinct thrown in for good measure.

If you plan to invest in real estate in the near future, one thing you should be certain to do is to work with an experienced Pennsylvania real estate law attorney every step of the way. Contact the real estate law attorneys at Curley & Rothman, LLC by calling 610-834-8819 today to schedule your free consultation.