*This post originally appeared on www.michaelmorrow.org.
One of the most difficult aspects of investing is dealing with market volatility. However, when it comes to limiting losses there is one asset that stands out above the rest: real estate. The U.S. Census Bureau reports that the price of real estate has increased in a consistent manner since 1940. While the subprime mortgage crisis limited its growth for a couple of years, it recovered relatively quickly and continues to increase in value. Keep reading to learn more about the basics of real estate investing and how you can continue to make money when the market is down.
Why Invest in Real Estate?
The best time to invest in real estate is the present. As stated above, real estate investments have attractive returns over time and some of the lowest volatility compared with other investments. Real estate is a great choice to add diversification to your portfolio. Research shows that during bear markets when stocks are down real estate usually goes up.
One of the most important keys to finding success with real estate is doing your research. Before you purchase any real estate you need to understand which markets will give you the biggest return. If you plan to rent out your property to individual tenants, you should make sure you purchase property in an area that’s attractive to renters. The area around universities is usually the best location to purchase property since student tenants will be available each year.
Decide Your Approach
Do you want to be a landlord, or do you plan to flip properties? There are advantages and disadvantages to each approach, so, again, you will have to do your research. When it comes to flipping properties, you also have some decisions to make. Will you refurbish homes before selling them, or will you search for undervalued homes in growth markets and sell them without making any improvements.
Find a Mentor
If you have never invested in real estate before, you should connect with experienced investors to learn some of the pitfalls to avoid. There is likely a real estate investor club in your area, or you can reach out to individual investors and ask to buy them lunch or dinner. Target investors who are active in the area where you are interested in investing. They’ll be able to provide you with the best insight.
The easiest way to get started is to read more about real estate investing. Visit this link to see a list of some of the top real estate books.