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The small investor has many more investment options than might seem readily apparent. But one of the very best long term investment options for the small investor is real estate. When the investor makes the effort to create a significant knowledge base and get involved with his community, it can be quite the best of the available investment options.

That said; let?s look at some of the basic principles of successful real estate investing. The first that comes to mind is that all real estate is local. This means many things. But the most basic is that no one can fight the trends in their local market, whether you live in a strong growing area or whether you live in a quiet small town. The trends in your market will determine much of your success or failure. You need to research these trends in some significant depth, and add to your knowledge on a daily basis.

The second of the basic real estate principles is that you make much of your profit when you buy. This means that to make your investment work well you must buy at a price that makes economic sense. You may love a particular property for its beauty or light or location, but you cannot make an investment based on those kinds of considerations. Instead you must ask yourself, is this a good value taking into consideration all the relevant factors. And to make it a bit more complicated, the relevant factors may well vary from area to area. This is part of the knowledge base that you must learn for your specific area.

The third basic real estate principle is the control factor. Can you control the economic value of the property in some significant way by decorating or fixing up or even by remodeling your chosen property? If you can then the property meets the control principle of successful investing. Can you leverage your knowledge by painting the home in attractive colors that are popular in your area? Can you increase the value of the property by increasing the current rent? A real world example from my area a few years back is adding a bathroom. There were a number of 3 bedroom 1 bath homes on the market, but the demand was for the 3 bedroom 2 bath homes. It was very possible at that time to buy a 3/1, add a bathroom and net out $20,000 USD on the project. At the very same time the common knowledge of the marketplace was that remodeling or fixing up a home was never profitable. This was a situation where better knowledge easily created significant profit.

What we can see from the above information is that real estate investing can easily meet the two universal investment principles. With diligence you can acquire significant knowledge that gives you an edge in your investing and also you can achieve significant control of your investment.

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