What's more, the real estate market is starting to recover: U.S. houses lost $489 billion in value during the first 11 months of 2009, but that was significantly lower than the $3.6 trillion lost during 2008, according to real estate Web site Zillow.com,
"We haven't seen home prices this low in so many years -- coupled with the rates being so low," says Jill Sjolin, an agent with Windermere Real Estate in Woodinville, Wash., who specializes in investment properties. "When the money is cheap to borrow and the houses are cheap to buy, it's absolutely the best time to invest."
While the timing may be right, these five tips can help first-time investors take advantage of what might be the opportunity of a lifetime.
Know your options. Since all investment properties are not the same, it's important to determine what type of property fits your strategy, says Harrison Merrill, chief executive officer of Merrill Trust Group, a real estate investment company based in Atlanta. Do you want to become a landlord or would you rather restore and resell properties? Are you interested in apartment buildings and other commercial real estate or buying land that can be developed? First-time real estate investors may want to start with residential housing, since commercial real estate and land development still face challenging market conditions, Merrill says.
Partner with experience. First-time investors should find a Realtor experienced with investment property deals that can help you locate promising properties. "Look for relational brokers who expect to do business with you again and therefore are going to be much more careful with what they recommend," says Merrill. A second option is to collaborate with a more experienced real estate investor and close a deal together. In this economy, an experienced real estate investor may be willing to work with you in exchange for the capital you can provide, giving you the opportunity to glean investment knowledge and experience firsthand, Merrill says.
Even if you don't collaborate with other real estate investors, talk to them about pitfalls they've experienced. "Go down to the general district court in your area and listen to some landlord/tenant cases so you can get a sense of what kind of challenges landlords face," says Jeffrey Taylor, author of "The Landlord's Kit."