The last downturn of the global stock market saw millions of ‘every day’ investors having their fingers badly burned. Overnight life savings were eaten away, retirement funds went into decline and the economic forecast for all of us who had any money invested in stocks and shares was gloomy to say the very least.
As a direct result investors in their thousands turned their backs on the rollercoaster stock markets and sought alternative asset classes in which to invest their hard earned money. This has led to a global boom in real estate markets and property prices, and it has spawned a generation of budding real estate investors.
For those of you wondering whether it’s too late to venture into real estate investing or considering how best to make the most significant returns from property investment, here are 5 hot tips for successful real estate investment to set you on the path to potential profits!
1) .Consider Investment Property Abroad
There are many relatively untapped property markets in countries around the world that offer the real estate investor greater return on investment in the form of rental yields or short to medium term capital growth.
While major markets in the USA, UK, Australia and Europe are slowing down, there are emerging property markets globally that are hungry for investment and are proving to be highly profitable.
For example, in 2007 a number of countries are already aligned for accession into the European Union and as a result property markets in these countries are likely to benefit from greater numbers of visitors, more trade, increased investment into infrastructure and more stable economies. The likes of Hungary, Slovakia, Bulgaria, Croatia, Turkey and even Northern Cyprus are just a few examples of overseas destinations with emerging real estate markets that may be worthy of your consideration.
2) .Make Sure Your Plans Are Profitable
This sounds ridiculously simple right? Well, you’d be surprised how few people actually make sure their plans are actually sustainable and as profitable as they hope.
Examine any real estate market that you’re about to enter by firstly comparing property values across the city, state or region and making sure you know what your money will buy you. Then ensure that the rental yield you intend to obtain from your property is actually realistic or that the asking price you intend to set once you’ve renovated the property will be offered.
3) .Never Assume Anything
This goes from assuming a house is structurally sound to accepting that tax laws won’t change – from believing your tenants when they tell you that they are house proud and honest to accepting the first builder’s quotation!
Do your due diligence on every single aspect of the process from ensuring the asking price for a property is fair to checking your tax returns before your accountant submits them for you. This is your investment, your future, your potential profit and therefore it is ultimately your responsibility.
4) .Employ An Expert When In Doubt
Few people are a master of all trades therefore be prepared to acknowledge areas where you are far from being an expert and at least consider courting a second opinion. Again, this goes from checking out the structural soundness of a property to understanding the legal ramifications of letting out your property. If in doubt always double check – and if this means you have to call in an expert, make sure you call in an expert!
5) .Set A Realistic Budget And Stick To It
Whether you’re purchasing property to let out or buying real estate to renovate you need to sit down and add up every single area of projected expenditure to enable you to set a realistic budget with which to work.
Make sure you add in everything from having searches and surveys conducted, legal fees, accountancy fees, insurance costs, likely interest payments on any finance required, taxation, connection of utilities, marketing for tenants or buyers, real estate agency fees, and of course don’t forget to add on the cost of the property and the price of any renovation and refurnishing and decorating work required.
Spend time considering every single area where a cost will be incurred and detail every likely payment that will have to be made and you will arm yourself with a bullet proof budget and do all you can to ensure you encounter no nasty surprises along the way.
What This Means For You, The Consumer
President Obama’s bid for a full economic recovery may be set back by many months thanks to rising interest rates which is making it more expensive for homeowners to finance their houses. Since bottoming out a few months back at a near historic low of 4.75% for a fixed-rate, thirty year mortgage, rates have begun to climb again and are now a full point higher. 
The recovery of the housing market is one of the pillars of President Obama’s economic stimulus strategy and without low mortgage calculator in place prospects for an early recovery have likely dimmed. After more than a year of sharply declining home values and record foreclosures, the battered housing market was beginning to show signs of recovery this spring, but refinance activity has since plunged.
Mortgage Refinancing Drops Sharply
Yesterday, The Wall Street Journal (WSJ) underscored the significance of the rate trend in its headline article, “Rate Rise Clouds Recovery.” WSJ noted that refinance activity – an important part of the mortgage financing segment – had dropped significantly at J.P. Morgan Chase & Co., one of the largest lenders in America. Investors have been spooked by sharply higher bond prices which push up mortgage interest rates. Of course, policy makers are seeing some different signs in the increased Treasury yields, pointing out that investors see that the economy is improving. Those increases could presage another concern, inflation, which could wreak economic havoc perhaps more so than the declines felt in the housing market.
The Fed Response
For its part, the federal government has promised additional intervention, saying that the Federal Reserve will buy Treasury notes within the next week or so. Yet, even as the Fed made that announcement, rates have continued to stay static or climb slightly. Another wild card in America’s recovery effort is the price of oil which recently pushed above $70/barrel, marking six straight weeks of increases. Although gas pump prices are well below the $4 per gallon figure experienced last summer, they have now climbed by more than 60% since bottoming out late last year. Consumers are just now starting to take their summer vacations, with some likely to refine their plans if fuel prices continue to increase.
