For most Americans 90% of their wealth is directly tied to the real estate they own. Throughout modern history people have contributed the accelerated accumulation of wealth to the rise in real estate values. If an increase in wealth is desired then purchasing real estate is something to seriously consider.

Home Values Will Increase

The beauty of real estate investing is that home prices consistently increase. You can expect an increase in the value of real estate you purchase to be anywhere from 10 to 20% depending on where the real estate is located and the condition of the home. Of course other factors could slow the increase as others will promote and even faster appreciation in value. Keeping the home in great shape without spending too much money to do it will payoff in the end when you are ready to cash in on your investment.

Renters Pay the Mortgage

One of the advantages of investing in real estate for the increase of wealth is that someone else pays for the investment. Namely-renters! After you have secured financing to purchase the home then you can rent it out and let the revenue from rents pay down the mortgage. Of course this is why it is important to choose your renters carefully. Performing adequate background checks from previous land lords to ensure they can and will pay for the home while they are in it is important. You don't want to be left with an empty house and no one to pay the mortgage.

Selecting a Good Investment Property

There’s a couple to things you will want to consider before deciding to purchase a particular piece of real estate. Purchasing a home in an area where the real estate prices are on the increase is a good indication you'll be making a good investment by purchasing in that area. The increase in annual value may level off but you can probably be assured they won't go down unless something drastic happens in that area. If an area is close to good employers or easily accessible to the highway this makes a home desirable to prospective renters as well. And taking the schools in the area into consideration will also be a factor if you plan on renting the home to couples or families. Renting homes to families or couples intending on having children these groups have historically proven to be good tenants.

Wise Financing Options

If you have all cash to pay for an investment property and you are willing to part with that cash then financing is not necessary. Most investors don't lay out a huge amount of cash for an investment property and usually opt for leveraging the purchase with mortgage financing. When shopping for mortgage lenders seeking the lowest interest rate is a good idea. The rent you charge for the home and the amount of your monthly obligation should at least be equal. If you mortgage payment is more then the home can produce in rental income you will have to come up the difference. Most mortgage lenders are going to require a 3-5 % minimum down payment toward the purchase of the home so expect to lay out some of your resources. You can also expect to pay anywhere from 1-3 percent in loan fees but these can be included in the mortgage principal amount.

Reselling Your Investment Property

Once your investment has reached an acceptable level of appreciation then it will be time to sell it and cash in on the difference between what you paid, what you owe and the current value of the property. It would be a good idea for you to sell the property yourself as you will save anywhere from 5-10% commission that a real estate agent is going to charge you sell the property. If absorbing this cost is not prohibitive toward turning an acceptable profit on the property then use an agent. They can make selling the property much easier and less of a headache in the long run. Many investors will obtain a real estate license and charge the commission on the sale of the property back to their company. Of course the commission would then become personal income and need to be reported for tax purposes. Plan on holding on to your property for 5-10 years before you sell it and you can realize a substantial return on your investment.