By Kelly Quigley, REALTOR® Magazine
Are You Missing the Real Estate Boom? By David Lereah (Currency/Doubleday, 2005)
As a real estate professional, it may be reassuring to know that one of the country’s top housing economists predicts the real estate market will continue to expand at a healthy clip well into the next decade. In his new book, David Lereah, chief economist for the NATIONAL ASSOCIATION OF REALTORS®, makes that exact forecast, saying that a host of demographic and economic reasons have created a “phenomenon that takes place only once every other generation.” While you may not need convincing that it’s still prime time to invest in real estate, it’s a message that your customers and clients may benefit from hearing. Use this book to get tips on locating a smart investment and learn why it may make sense to tap into the second-home and rental-property markets.
Tips From the Book:
- Trade up. Trading up is one of the ways to increase your investment in real estate. Evaluate your neighborhood, and if you see that your home is one of the higher-priced homes in the area, it may be time to move. The highest-priced home in the neighborhood is usually held down a bit by the lower-priced homes with regard to future value.
- Renovate to increase value. If you’ve owned a home for a while but you don’t have the resources or the desire to move to a larger home, make home improvements as a way to further participate in the real estate boom. But steer clear of home improvements that don’t add value to your home—such as a hot tub on your deck. Focus on projects in the kitchen and bathroom, or on second-story additions, which offer the greatest return on investment.
- Buy a vacation home. If you can afford a second home, vacation properties provide a great opportunity to take advantage of the real estate boom. They offer potential for considerable price appreciation over the long term—perhaps more than any other property type. However, they’re also expensive to buy and maintain. The payoff could be significant in the end, but the costs of getting there are not small.
- Indirectly invest in real estate. If you are still skittish about investing in real estate beyond your primary residence, you may want to consider cashing in on the boom through “indirect real estate investing.” Depending on the amount of money you have to invest, you can purchase shares in real estate investment trusts (REITs), real estate mutual funds, real estate limited partnerships, or equity shares of real estate and real estate-related companies. You also can buy mortgage-backed securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.
For more on this topic, read REALTOR® Magazine’s interview with David Lereah, in which he discusses his new book and the importance of real estate investment in today’s market.