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Real Estate NewsREADY FOR REALTY INVESTING 2/25/2004 CHICAGO (CBS.MW) -- Even though the stock market has done a whole lot better in the last 12 months, real estate as an investment has lost none of its luster. Many realty analysts say Americans have rediscovered property as an asset class and have every intention of continuing to put money in regardless of where equities go. Suzanne, an e-mailer from Northern California, is representative of this renewed interest in real estate. "I am considering purchasing property with another woman here in the Bay Area. I will tell you that I am an absolute novice. She would like to purchase the property (duplex/triplex) as an investment," she wrote. "The other option, which may or may not pan out, is to buy a 'fixer upper.' There is someone I know that is experienced in contracting/construction. Since I don't own any property myself, please let me know what is the best approach to this." Either approach that Suzanne takes can prove to be a good investment. In the case of buying a duplex or triplex, the rental income from the units you don't occupy can help make the mortgage payments and in many cases qualify you for a bigger mortgage to get the property. But you have to be a good property manager and landlord to make it work. Investing in residential real estate brings management responsibility not just for your own abode but for your tenants' units as well. Fixing toilets at 3 a.m., should it come to that, is not everyone's idea of a great real estate deal. Buying a fixer-upper home, especially if you have trusted contractors at your disposal, can be lucrative since those properties are generally available well under market value and your sweat equity can help bring them up in value. It is best to find a house in a good neighborhood that needs mostly cosmetic repairs -- paint, wallpaper, carpet, landscaping -- which can provide a great return on investment for those who can see beyond bad decorating, dirt and routine deferred maintenance. (You'll often find these kinds of homes through estate sales or in areas with larger elderly populations.) You'll need a good home inspector to help you sort out homes in need of more serious structural or major renovation work, which you want to avoid so as not to fall into a "Money Pit" situation. If you are a first-time homebuyer, there may be special loan or down payment programs available to you through your county or municipality. Any good mortgage lender and or knowledgeable Realtor should be able to steer you to such programs if you qualify. One word of warning when buying property in two names: The legal way in which you hold title will be important. You'll need the help there of a real estate attorney who understands all the options available in California. My best advice is to pick a neighborhood or two in which you'd like to purchase property and search out a real estate agent who does a lot of business in those areas. You'll want a buyer broker on your side of the deal; that person will work solely in your interest and not the interest of the seller. Some of the best agent referrals will come from friends and family, but searching the classified ads for names that turn up frequently on addresses in the neighborhoods you're considering is as good a way as any to come up with candidates. Location and property type ----------------------------------------------------------------------- Karen and Bob Hermanson are also looking to invest some extra dollars in real estate. They e-mailed after seeing census data that led them to believe Florida, where home prices have risen strongly in the last three years. might be a good place to park some of that money. They also thought Tucson, Ariz., looked promising. "I have never invested in real estate and quite frankly, am a bit frightened. But I do believe it's the best game in town, because it's not infinite," Bob wrote. "But location, location, location is important, and my question is ... where to invest ... for a "safe as possible" investment.. Land? Rental homes?" Land is the most speculative of real estate investments, single-family homes the least. Rental property can be a good way to build wealth, but it can be management intensive, especially if you live distant from your property -- in that case you'll need a good management company or local agent with management experience on your team. As for location, someplace like Tucson, which has a transient university population and is growing on its own accord, would offer good opportunity. Many areas in Florida would also seem to present a good investment case, but as you point out the higher entry prices can be a deterrent. There are plenty of self-help books from self-proclaimed real estate experts on the shelves that provide advice on every real estate investment strategy. A good no-nonsense no-hype book that can help you get started is "Investing in Real Estate -- Fourth Edition" by Andrew McLean and Gary Eldren (Wiley.) It gives you the basics if you want to directly buy real estate. One alternative ----------------------------------------------------------------------- Another way to get into the property markets indirectly is through real estate investment trusts. There are several that specialize in residential rental properties, some even in specific regions of the country, and allow you exposure to real estate as an asset class without the risk of individual property ownership. Check at the National Association of Real Estate Investment Trusts Web site for more information on REITs. ----------------------------------------------------------------------- Questions? Please contact us at: http://cbs.marketwatch.com/support/feedback.asp?siteid=mktw CBS MarketWatch is a licensee of the TRUSTe Privacy Program.To see our Privacy Policy for details, go to: http://cbs.marketwatch.com/support/privacy.asp?siteid=mktw Intraday data provided by ComStock, a division of Interactive Data Corp. and subject to terms of use. Historical and current end-of-day data provided by FT Interactive Data. Copyright 1997-2004 MarketWatch.com, Inc. CBS MarketWatch |
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