Real estate investing never completely went out of favor, even during the darkest days of the economic recession. In fact, with real estate prices still low in many regions, investors are accounting for a larger percentage of single family home purchases than they were in the years before the real estate downturn. Investing in real estate appeals to many middle class investors, because starting out small doesn't require a huge amount of capital.
Business.com recently spoke with Julie Duquet of NYREI.com, the New York City area's number one learning institution for licensed real estate professionals and people who want to learn about real estate investing. We asked Duquet about how a non-wealthy person can get into real estate investing without exposing themselves to excessive financial risk.
Q. For the typical middle-class person working a full-time job and wanting to get into real estate investing, what should be the very first step? Saving up a set amount to invest? Following local sales prices in public records? Taking a real estate course?
A. New York Real Estate Institute suggests starting with our 3-hour course, "How To Become an Investor," which covers all the basics to quickly point you in the right direction for investing. The instructors are highly motivating and provide action plans to get you going. We offer both one-on-one investment training and group classes. There are advantages to both course settings and most students use a combination. The private coaching is perfect to discover how much money you can leverage to purchase properties, set personal goals, and go out into the field to discover your market preferences. The group courses provide interaction with other investors and like-minded professionals. Learning in a group setting is always beneficial, especially in real estate where networking has a very valuable place. One aspect of investing that many people do not realize is how to get money to invest. We teach you how to network with the right people and find the money needed to invest. It's not an overnight discovery process, but we find within 2- 6 months most students are on their way to becoming successful real estate entrepreneurs.
Q. How can studying for a real estate license help a person who doesn't necessarily want to be a real estate agent or broker, but who wants to invest in real estate?
A. Learning about real estate best practices and becoming involved in the business as an agent helps to immerse you in the language of real estate. You need to know the language to be taken seriously, and you need connections to be successful. By taking courses and becoming involved in the real estate scene, you will meet people every day that will help you reach your goals.
Q. According to research by the Chicago-based Spectrem Group, the typical $25 million-plus investor often has rental income as one of his or her top sources of income. Why are rental properties so attractive to experienced investors?
A. Rental properties added to a portfolio of investments can create a steady stream of cash flow.
Q. Most of us think of our personal homes as an investment. For first time homebuyers, how long should they expect to own their house before it actually starts adding to their wealth in terms of price appreciation? To put it another way, if a person only plans to stay in an area for two or three years, is it better to buy, or better to rent and let the landlord cope with the costs of ownership?
A. We always recommend buying. If you improve the property in any way, you will increase the value. But knowing what to do and where to put your money is the important issue. We help people spot and locate undervalued property that is going to appreciate -- if not immediately, certainly within the next two years. There are so many ways to add value to a property, but in the end the numbers don't lie. You must do your due diligence, research the property and the neighborhood, and discover what will give you the best return on the investment.
Q. What are some of the most common mistakes people make when they first get into real estate investing?
A. Most people become emotionally attached to the property. That's a big mistake. This is not "your" home. You are purchasing an investment. You need to know what people like, cost of renovation, and the value before you purchase the home. Doing your homework and learning the most basic points of investing can help anyone purchasing a property.
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