I would like to know what kinds of investments in real estate are worth it. Condos, Coops, houses, I live in the Bronx, NY, and I would like to invest in my child's future by putting the money into real estate since it's so unlikely to lose it there. Please let me know your thoughts.Thanks a lot
Like being a landlord? If not, invest in a real estate investment trust (REIT).
I'm doing the same thing here in NC with a 3/1.5 home of 1,000 sq ft. My wife and purchased our first home through a first time buyer's program through the state with no money down for 60% of what we qualified to borrow ($110,000). We are living here for 2 years and then moving to a better school district after we fix it up. Over the next 10 years we are going to make more improvements as we rent it and when our oldest goes to school we plan to sell it (but might not). I could never put this kind of money away in cash as a lower-middle income parent.
In my area people seem to think of single family homes as the place they most want to live in. If they can't afford that they may settle for Condos or co-ops or whatever. That means that when times are tough the single family homes do not go down quite as far as the others and in the good times the single family homes go up faster. In your area the facts may be different. I would look at the facts for your area. Ask yourself, ask your friends. I own six rental houses and find that the small ones rent faster and get a better return on my money. Again that may not be true where you live.
If you have money to invest but don't have the real estate knowledge, the best way to make money in real estate is to become a private money lender. You don't have to deal with the negative aspects of real estate investing such as being a landlord. There are four basic ways investors obtain money for real estate deals: - use their own money - obtain a conventional mortgage (conventional mortgage companies) - obtain a hard money loan (professional agencies who loan money) - obtain a private money loan (private citizens with cash) Private money is the easiest for the borrower since there are no income or credit requirements or complicated application forms. The property in question is used as collateral. You as the private money lender will earn double digit interest on the loan. If I had the extra money, I would do this. I have read that some people do this with their self-directed retirement accounts. Be sure to check the law about legal restrictions when dealing with retirement accounts. You can't invest in your own deals. For more information, attend a real estate investor club meeting in your area to make contacts with investors. Click on the source links I posted below.
I've been looking at commercial property, as existing tenants (and happy ones) would be paying rent. You can still lose in real estate, as we've seen in the past year; it's now sweeping across the country in areas previously not that bad. I know many people who either had to take a loss due to losing their jobs or being relocated, etc., because the homes were not selling or are upside down without taking out a second or refying as in the past. It is a frightening thought right now, as investing in real estate use to be a sure thing. I think most of us lived through that, and yes, made some money. But now, I would think and wait a while longer. Or get repos and invest wisely. But plan on holding the property for a long, long time. And normally what you'll make money on like a great property with all the amenities, just are not going up in value. Kudos to looking out for your kid.
