know the rulesThe new mortgage rules that went into effect January 1 this year will have a direct impact on investors thinking of investing in the real estate market. The credit requirements are now a little stiffer and lenders look at how many properties an investor holds before providing loans to them. They also limit the mortgage to 30 years along with the requirement that the debtors’ debt to income ratio must be lower than 43%.

However, in the U.S., investing in real estate is really a smart move especially today with nominal finance costs at all time lows and property values increasing at a respectable rate; though they are still lower than the highs of 2007. Various studies have proved that investment in real estate brings equity like returns that have lower variability or risk as compared to investment in equity market. Here are the five best rules for you to become an experienced real estate investor.

1. Your Real Estate Financial Model should be Liquid: You should be careful not to overburden yourself with debt. Real estate investment entails such things as mortgages, insurance, taxes, utilities and you should make certain that you are able to fulfill all these demands of real estate investment.

2. Sharpen your pencil and Do your math: Second most important rule is that you should properly research and buy properties that you think will bring greater returns as compared to your investment. You should buy only limited real estate property whose appreciated price and rental income will more than make up for the investment. A qualified real estate investor said that real estate, if chosen wisely provides the highest returns, greatest value, and the least risk.

3. Don’t Overlook at Cash Deals: Lenders limit you to own at most four properties otherwise they do not provide you the loan. In such cases, do not hesitate to buy properties for cash that you think will provide high return as compared to their investment.

4. Partner with an Experienced Real Estate Agency: Especially at the start of real estate investment, you should try to partner and get services of professional real estate agencies, contractors. They know the fine rules of the market and you will be able to get invaluable real estate information from them by utilizing their services.

5. Never be Afraid to Sell in Case of a Good Deal: I should never sell the real estate I buy, right? Wrong. You should be on the lookout for the best time to sell your real estate. Real estate investors who held on to their investment from 2000 to 2007 were losers, as after the high of 2007 most investors could not get high offers for their property. You must be prepared to sell at the right moment when prices are highest and show signs of going down.

Source: www.foxbusiness.com

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