Real Estate Investing Realistically

Motley Fool has yet another article about the real estate bubble (Registration Required).

Some of the juicier quotes from the article:

It’s safe to say that people’s expectations are out of whack and that real estate investments won’t increase at the same rate they have in the past five years. As a matter of fact, in some markets, I don’t think it’s out of the question for some properties to lose 20% to 30% of their value in a given year or to see no increases for a decade or more.

I think there could be some truth to this. My last post talked about the Increasing Risk of Price Drops in the housing market. My advice to avoid this is to invest in areas that aren’t so hot at the moment. See my previous post about the Evaluation of Home Prices in Various Markets to get some ideas of good markets.

If a home is selling for 150 times the monthly rent (or less), it’s generally a good deal. If it’s selling for more than 200 times the monthly rent of a comparable property, you’re better off renting.

This might be a good figure if you are looking into buying or renting for yourself, but it is too high if you are looking for an investment property. I personally look for something closer to the price being 100 times the monthly rent.

If you’re not a real estate expert, now is not the time to start speculating.

I 100% agree with this. I don’t think speculating at any time is a good idea. Stick with investing instead of speculating.

This entry was posted on Sunday, October 30th, 2005 at 11:53 pm and is filed under Article, Real Estate Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.