Strategies for Real Estate Investment When House Prices Are High
Investing in real estate can be a lucrative opportunity, but high house prices in your current area might make it seem daunting. However, there are several strategies you can employ to secure profitable real estate investments. This article explores how to approach the market, including investing in real estate investment trusts (REITs), seeking opportunities in lower-priced regions, and engaging in international real estate investment.
Understanding Real Estate Investment Trusts (REITs)
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate. By purchasing shares in a REIT, you can partake in a diversified portfolio of real estate assets, similar to other public stocks, mutual funds, or exchange-traded funds (ETFs). REITs can be an attractive option for investors seeking exposure to real estate without the need to buy and manage physical properties.
Explore Lower-Priced Markets
The financial landscape is not uniform across regions. While your area might be experiencing high property values, other parts of the world might offer more affordable housing options. This variability in pricing presents an opportunity for savvy investors to tap into regions with lower property costs.
In 2019, I utilized this strategy by selling three houses in Southern California, where real estate was valued around $400 per square foot (sf), and then purchasing four houses for cash in the Houston suburbs, where new residential real estate sold for approximately $100 per sf. This investment strategy not only allowed me to purchase rental properties but also to pay off the mortgages on other rental properties, thereby reducing financial exposure and increasing cash flow.
International Real Estate Investment
For those willing to venture beyond their home countries, international real estate can provide unique investment opportunities. Several channels on YouTube, such as the Cheap Houses Worldwide, outline how to invest in real estate abroad and make a profit.
One remarkable example is buying property in Poland, where market conditions might make it possible to purchase houses for a fraction of their cost in other countries. By acquiring properties that are in need of renovation, you can transform them into valuable rental assets.
Personal Success Story
One of the challenges some investors face is accepting that real estate investment is not confined by local boundaries. As an example, I purchased a brand new 2,230 square foot, four-bedroom, three-bathroom house for $231,500. This approach reveals the potential for profit in different markets and the importance of not being confined to one geographic location.
Conclusion
Investing in real estate is a strategic decision that can yield substantial returns. Whether through REITs, exploring lower-priced markets, or venturing into international real estate, there are numerous avenues to pursue. The key lies in diversifying your investment portfolio and being open to opportunities that go beyond your immediate surroundings. By taking a proactive and diversified approach, you can navigate the complexities of the real estate market and secure profitable investments.