Tips & Trends for the Flagstaff Real Estate Market:
Past Articles [June 2004]
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Home Equity and Real Estate Investing
There are many ways to add to your net worth, but taking advantage of the increase in your home’s value isn’t usually on your financial planner’s list. Last month I wrote about the value of your home’s equity. This month I would like to provide you an option to utilize the equity in your home to increase your net worth by investing in real estate. In our market today home appreciation has contributed significantly to most home owners net worth and might give you the ability to make a down payment on real estate for speculation purposes.
If you would like to buy a real estate investment, one consideration is to use your home equity for a down payment on an income producing property. Another option is to purchase vacant land that you think may appreciate in value over the next few years.
While real estate investment can be a risky business indicators are that Flagstaff’s real estate will continue to increase or at a minimum maintain its current value. The latest numbers that I have seen concerning the growth of our city reflect a projected 3% annual increase in the population. That 3% would seem to indicate that an investment in real estate may be a relatively safe place to put your home equity dollars.
Before refinancing your home to get to your equity, conduct some research on property values and investment opportunities. As I write this article I can tell you that competition is stiff for properties that have investment potential in our market. Talk with your realtor and other investors to test the waters. As in any investment there is always an element of risk. Real estate investing is not for the faint of heart. If your risk tolerance is low you may want to keep the equity in your home right where it currently is. But if you are looking for an investment vehicle that can increase your bottom line then using your home equity to buy real property may be the right decision for you.
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