REAL ESTATE INVESTING

REAL ESTATE INVESTING

You may have the Benjamins from work, but let’s face it; you can’t have the life you want by strictly depending on the money you earn from your day to day job. Just like they say, “ninety percent of all millionaires became so through owning real estate.”

Your heart probably aches for financial independence. That is typically the American dream of financial freedom and a small family. But, how do you achieve this financial stability? Investment? When you think of real estate investing, you are most likely wondering I went to med school; I cannot do this, it’s for business students and real estate graduates.

Guess what! Real estate investment is just like any other class of investment. Once you decide to dive, it’s as easy as taking a bite from a pizza slice.

Real estate is real property. You can touch it feel it, and see it. It could never plummet that the human population continues to grow. We need housing- offices, residential places, you name it! It’s is here with us unless, of course, we decide that we are moving to Atlantis; this doesn’t work unless you are Aquaman.

However, do not go into real estate investments blindly. There are a few factors that you should consider before committing your money. This blog will give you an insight into the nitty-gritty of the real estate investment world.

What is Real Estate Investment?

Without going into the complexities, the real estate comprises of land and buildings. However, real estate investment is pumping your dollar bills into real estate for profitable returns. How do you do this? You can purchase or construct, then rent out or sell it for a better price.

In real estate investment, you can go to the residential or commercial way. When you pick the suburban route, it would consist of you owing homes or residential houses, then lease out, rent, or sell to families; for instance, when summer schools are closed and you own a home near the beach, you can rent it out as an Airbnb.

In commercial real estate, investments involve you selling or renting to industries, corporates, or banks. However, this is defined by the kind of building you have and the number of units. Not just any building may pass as commercial unless you have four units.

By now, you must be wondering, how do I benefit from investing in real estate? Okay, you can benefit in four ways through real estate investment. These are:

• Rent
• Buying and Selling
• Tax Benefits

This is by far the most popular way for you to invest in real estate. You could own various residential and commercial property; BUT you definitely cannot live in all of them at the same time, let alone move into all of them. What do you do? Why not rent it out? Here is the catch, when you rent out, it provides the best way to invest since it is stable, consistent, and predictable in terms of revenue collection. What more can you ask for as an investor than this?

At times you may not be free, but you can hire a property management company; they won’t cost you your tooth and nail, but just about 10% of the total amount you get as rent.

When you rent out, you still have specific responsibilities that you may need to carry out, such as maintenance and other duties of a lessor.

Buying and Selling

This is merely an appreciation. It works like a savings account where you put your dollar bills in the bank and give it time. It then multiplies in folds. You could buy a property then let it rest as it grows in market value; that is, it appreciates then sell it at the prevailing market price at a profit.

When you decide to do this, you should ensure that the property purchased tends to increase in value. This could be buying a property in areas that are likely to attract the human population like near colleges, job offering areas, accessibility to those areas through public transport.  If you are looking for a long term type of investment, this is it!

Interest

Going by the name. I bet you must be intrigued. The term interest is what best strokes the mind of an investor. But, hold it, this is a slightly different type of interest. Picture this; you are a Property Investment Company; you have the financial capabilities while I don’t. So, I come to you for a loan so I could buy a property, then in repaying you, you collect the interest and fees.

You must be asking yourself, does that make me the bank? Well, not really, but you are acting as one and reaping from the real estate investment.

Tax Benefits

You are a rookie; you may not know this! Did you know that one of the benefits you enjoy as a real estate investor is tax benefits? Being a real estate investor may not necessarily make you a Donald Trump, but it sure does make you a business owner. As a business owner, you enjoy tax deductions on this like supplies, travel; you name it.

Do you have what it takes?

Real Estate investment maybe a piece, but what if you don’t eat cake? This should not worry you. Just ask yourself, do you have the knowledge and skill? In real estate investment, you are required to bear a little bit of knowledge and expertise as this will help you when it comes to scouting market options, math, motivation, and tolerance because there exist difficult tenants to deal with if you choose to go the renting way in real estate.

Market options do you have?

It goes beyond your knowledge and skills when it comes to real estate investment. If you are to go the appreciation investment way, you need to invest in a market that is on an upward trend. Markets that are on a downward spiral should be avoided like the plague because investing in such defeats the whole point of investing, which is to make a profit. If it were about stagnating, then you would rather keep your money under your bed or go a tri in the Maldives.

What resources do you need?

You will need resources if you want to invest in Real estate. The question you should grapple with is not how much, but how do you spend and what are the risks. In investing, there are risks, so you must be prepared for the event that you may lose it all. Do avoid such by not putting your eggs in one basket to avoid being in bad financial crisis in the event of a failure.

Are you able to match the level of commitment required?

You may opt to invest in real estate through renting. When you decide to rent it make you the lessor and the tenant becomes lessee. Some duties are imposed on you other than collecting the crisps dollars. Some of the things required of you include maintenance and repairs. This should not make you freak out if you didn’t do it. Why not hire a company, but once you do, are you ready to pay the fees for their services?

Buying the Right Property

Buying real estate property is slightly different from walking into a McDonald’s joint and asking a beef burger with extra cheese. There are various factors that you need to consider before settling for the property to buy.

Maybe you are scratching your head right now, wondering what are some of the things you should consider before settling for the right property. The right property here means one that can generate good monetary returns for you.

First of all, you should have a rough idea of the kind of property you want to invest in since the categories cut from residential to commercial, not to mention industrial. Once you have your mind fixated on the type of property you want to invest in, consider factors such as;

Location

This is the backbone of real estate investment. It determines whether you will be able to walk to the bank smiling, counting the dollar bills, or not. If you choose to rent, it is best to have your property near people attracting areas such as colleges or job hunting areas. Also, consider factors such as accessibility through public transport; this enables your property to appreciate, and it attracts tenants.

Costs and Profitability

Let’s face it. You want to make a profit. Thus, consider the amount you will pay against the cost for repairs and the chances of the property appreciating if you do the math and end up with nothing don’t invest.

Also, asses the condition of the property. Please don’t buy a wreck for what it’s not worth.

Investing in Real Estate is a lucrative investment option, but you have to look out for fraudsters posing as brokers or agents. Also, you must bear a little knowledge of contractual terms. Don’t be like the guy who signed his resignation letter without knowing.