The real estate facts that are listed here are designed to help you familiarize yourself with various aspects of the market. The list covers everything that a beginner should know before getting started.
1 – Real estate investing is one of the best ways to secure an early retirement
By buying an investment property and renting it out, you can generate a steady positive cash flow for years. As long as you properly manage this money and continue to slowly build your rental property portfolio, you can put the extra income towards securing an early retirement.
2 – Real estate has a low barrier to entry
Contrary to popular belief, you don’t need to invest big to start making money with real estate. In fact, you can put in as little as 15% of the total sum of the investment. This makes real estate a much more interesting option than traditional stocks or bonds.
3 – Real estate appreciation will send your net worth soaring
A real estate portfolio will appreciate in value over time without requiring any direct intervention on your part. You can expect an average appreciation rate of 5% in most markets. Consequently, your net worth will grow exponentially in a rapid fashion.
4 – Investing in real estate is the best protection against inflation
Owning a rental property can be the perfect hedge against inflation. While most assets tend to wilt under inflation, real estate experiences a boom during those periods. The reason for this is quite simple. As inflation increases, so do the value of your investment property and the rental income that it generates.
5 – Real estate investing comes with several tax benefits
On top of its high-profit potential, real estate offers a number of tax benefits. In addition to this, there are other benefits on lower capital gains, refinancing and depreciation.
6 – Millennials constitute the majority of home buyers
The implications for real estate investors are not negligible. As a matter of fact, this shift is an encouraging sign. If you plan on buying an investment property to quickly sell it, you should be able to sell it if you first learn what millennials are looking for.
7 – The real estate market will continue to grow
Of all the real estate facts on this list, this is probably the most consequential one for reticent investors. More importantly, all the indicators that are used to predict market growth are trending upwards. Here is an overview of the most important ones:
- The unemployment rate is low and the job market is offering new opportunities
- Fewer buyers are using interest-only home loans
- The younger generation is willing to invest in real estate
- Taxes are fairly low
- Spending in the economy is steadily increasing
8 – Even subpar neighborhoods are attracting buyers
This doesn’t necessarily fall in the category of real estate facts as it is subject to variable market conditions. This is especially the case in large real estate markets. The fact that areas without easy access to highways or essential amenities are performing well bodes well for real estate investors.
Take the time to understand every aspect of real estate and start looking for investment opportunities once you feel you have a firm grasp of all the variables.
FAQs
In fact, in marketing, there is a rule that people need to hear your message 7 times before they start to see you as a service provider. Therefore, if you have only had a few conversations with the person that listed with someone else, then chances are, they don't even know you are in real estate.
What is the 7 rule in real estate? ›
In fact, in marketing, there is a rule that people need to hear your message 7 times before they start to see you as a service provider. Therefore, if you have only had a few conversations with the person that listed with someone else, then chances are, they don't even know you are in real estate.
What are the 5 golden rules of real estate? ›
If you follow these 5 Golden Rules for Property investing i.e. Buy from motivated sellers; Buy in an area of strong rental demand; Buy for positive cash-flow; Buy for the long-term; Always have a cash buffer. You will minimise the risk of property investing and maximise your returns.
What is the 4 3 2 1 rule in real estate? ›
Analyzing the 4-3-2-1 Rule in Real Estate
This rule outlines the ideal financial outcomes for a rental property. It suggests that for every rental property, investors should aim for a minimum of 4 properties to achieve financial stability, 3 of those properties should be debt-free, generating consistent income.
What is an interesting fact about real estate? ›
The average length of homeownership in the U.S. is 13.2 years for a typical homeowner. The median length of homeownership has increased by 31% since 2012. Homeowners in the Northeast stay in their homes the longest. On the other hand homeownership tenure in the Mountain States is the lowest.
What is the 8% rule in real estate? ›
You want to earn a net income of $8,000 a year if you invest $100,000 in the property, he says. The reasoning behind the 8% rule is that it compensates you for the risk and relative illiquidity of your investment.
What is the 80% rule in real estate? ›
In the realm of real estate investment, the 80/20 rule, or Pareto Principle, is a potent tool for maximizing returns. It posits that a small fraction of actions—typically around 20%—drives a disproportionately large portion of results, often around 80%.
What is the 1 rule in real estate? ›
The 1% rule of real estate investing measures the price of an investment property against the gross income it can generate. For a potential investment to pass the 1% rule, its monthly rent must equal at least 1% of the purchase price.
What are the 4 pillars of real estate? ›
Introduction to the 4 Pillars of Motivation in Real Estate
At the heart of this are the 4 pillars of motivation in real estate: Condition, Timeline, Motivation, and Price. Each of these factors plays a crucial role in the decision-making process for both the seller and the flipper.
What is the 50 50 rule in real estate? ›
The 50% rule is a basic guideline in real estate that suggests that half of a rental property's gross income should be estimated to cover operating expenses. There are a few rules of thumb that can be used in real estate when looking at and evaluating potential investments.
Real Estate Investing with 3.5% Down
The "4" Represents your first purchase of a four unit building, then the "3" represents the pruchase of a three unit building, the "2" represents the purchase of a two unit building, and the "1" represents the final transaction of purchasing a single famliy onwer occuped unit.
What is the 90 10 rule in real estate? ›
Roger shared his 10/90 rule, balancing risk by investing 10% in higher-risk projects and 90% in stable, cash-flowing properties. This strategy helps navigate economic cycles and maintain a steady income stream.
What is the 3 foot rule in real estate? ›
The 3-foot rule is specifically for real estate sales people. It simply means that you should talk real estate to every person that comes within three-foot of you. I have also been teaching this technique to people in sales of other industries for many years, and I might say with great results.
What is the biggest problem in real estate? ›
2022-23 Top Ten Issues Affecting Real Estate®
- Inflation and Interest Rates.
- Geopolitical Risk.
- Hybrid Work.
- Supply Chain Disruption.
- Energy.
- Labor Shortage Strain.
- The Great Housing Imbalance.
- Regulatory Uncertainty.
The term “real estate” is first recorded in the 1660s, so we find its etymological origins in Early Modern English. The word “real” is derived from Latin, meaning existing, actual, or genuine. The word “estate” is an English translation of the Old French word “estat,” meaning status.
What is the 7% rule in real estate? ›
It has often been said that 20% of the players do 80% of the business: the 80/20 rule as it is sometimes referred to. However, this contrast has reportedly become even starker in the real estate world. According to the data, just 7% of real estate agents do 93% of the business.
What is the rule of 7's? ›
The Rule of 7 asserts that a potential customer should encounter a brand's marketing messages at least seven times before making a purchase decision.
What is the 7 percent sell rule? ›
Always sell a stock it if falls 7%-8% below what you paid for it. This basic principle helps you always cap your potential downside. If you're following rules for how to buy stocks and a stock you own drops 7% to 8% from what you paid for it, something is wrong.
What is the 7 investment rule? ›
The 7-Year Rule for investing is a guideline suggesting that an investment can potentially grow significantly over a period of 7 years. This rule is based on the historical performance of investments and the principle of compound interest.
