Undoubtedly, you’re familiar with the traditional investment methods—stocks, bonds, mutual funds, simple savings, and investment accounts. Although such investments can generate significant returns, nothing is guaranteed as stocks fluctuate and may drop at any time.

You have little control over what happens. Economic twists and turns along with other factors will influence your shares’ performance. This is not the case with real estate investments. You call the shots and this involves all aspects of the process. From deciding on which properties to invest in, which renovations to tackle and what exit strategy to apply. When investing in real estate, you expect an increase in appreciation every year and even more so if you rent out your property.

Set specific goals and work towards success. Investing in real estate is a hedge against inflation. The annual inflation rate usually stands at about 2%, so if you aren’t getting more than that a year in value you are losing money. Property reacts in proportion to inflation. Therefore, as inflation rises, rents and home prices will also increase. As a result, if your investment is in-step with or ahead of the marketplace trends and values it keeps you safe in terms of the long-term value of your investment.

Considering the differences and influences in real estate versus traditional investments, you can see how investing in property can safeguard your assets in both the short and long term.

Real estate is defined as the property, land, buildings, and air rights both above and below land. There are four types of real estate: residential, commercial, industrial and vacant land. With this in mind, you can move forward.

What types of properties should you invest in?

It’s important to know the various property options that exist in the marketplace. While properties vary according to the area and market conditions, most investors tend to focus on one or more of the following types of properties: residential, commercial, industrial, and land.

It is important to have knowledge of real estate classification, because each zone, construction and sale transaction is dealt with differently.

Secure cash for payments and funds. Make money when you buy, not when you sell. It is advisable to use a fraction of your funds when buying property, let’s say 35%. This amount should include all acquisition costs, and further expenses, such as repairs and renovations. etc.

This way you have a cushion to fall back on if and when necessary. If you can’t do so then abandon the specific property and look for another one.

Real estate entails the construction, buying, and selling of property. You must remember that construction is a component of the Gross Domestic Product. It affects both the economy and development. New constructions data is an economic indicator, setting the average price and trend for sales of new houses.

A property is priced with the use of comparative listings of recently sold properties. For a starter, buyers’ agents can be helpful. They have the knowledge and means to guide you, and show you the ropes for handling negotiations, making deals and settling at a lower price on your behalf.

Think about what your property value will be in ten months or in ten years’ time. Will it rise in value significantly?

If you get a bank loan or mortgage, how will future interest rates and taxes affect you?

You must be able to answer these questions and others that will arise before you sign on the dotted line. Make sure you know where you stand before you risk investing in the real estate market. Study the statistics on new housing, check the development projects planned for the area all of which will give helpful insights to the future of the housing market in the area you have chosen.

There are three significant areas to study:

1. The inventory of the number of homes/properties which are available for sale and remain unsold.

2. Supply and demand. Do your research on how long it usually takes to sell a house or property based on the inventory information.

3. Sales Prices. Look for official reports on the median and average new housing sales price.

As a beginner in real estate investing you must set your goals and have the necessary motivation and commitment.

It is essential to gain knowledge of the ins and outs of the real estate market. You must keep constantly updated on all local and state regulations and policies involved, including usage, specifications, codes and taxes.

There is no perfect recipe for real estate investment. But by diversifying your investments amongst the choices given you will achieve better results, in time. The best course of action is to know what is important to you, your strengths and limitations all of which will determine your ultimate guide to invest accordingly.