Foreclosures, falling home prices and extremely low interest rates may make purchasing a home in 2009 particularly appealing. While it is true that it is definitely a buyers market, and there are deals in every neighborhood, there are also numerous dangers associated with real estate investing in a slow economy.
Perhaps the most important thing to keep in mind if you are thinking of purchasing real estate this year is that now is not the time to attempt quick real estate flips. While it can be done, unless you are a professional investor with years of experience, you could find yourself in a big mess very quickly. If you are going to invest in real estate to make money this year, it may be wiser to invest in rental properties. Buyers should plan on holding onto their property for a number of years. It is the safest way to invest in real estate in a down market.
Secondly, it is imperative that you don’t just buy a property because it is cheap. There are millions of cheap homes all over the country, however, only a portion of them are good buys. You should treat foreclosures like any other real estate transaction. Research the neighborhood, the current market value of the homes in the area, and definitely the home itself. Many people make the mistake of purchasing a foreclosure blindly, in other words, without seeing it in person. Unfortunately, thousands of homeowners find that once they purchase a distressed or foreclosed property, they will have to put thousands of dollars into repairs to make it habitable. Some buyers even find that they are financially sunk.
Before you jump into any real estate transaction, make sure you understand your local market. You can protect your investment by doing your research ahead of time. Believe it or not, there are many areas of the country that have rising home prices. The housing outlook as a whole may be grim, but your local market may be doing well so find out the facts.
Lastly, don’t stretch yourself too thin financially. The economy is not expected to turn around in 2009, so if you are going to purchase real estate, make sure you can afford it now, while times are tough. After all, times may actually get tougher before it gets better.