To begin with, real estate involves investing your money in something tangible, unlike the stock market. Interestingly, it has been alleged to earn the investors more profits than they actually do in stocks! The simpler reason behind this would be the long term investment and profit making factor involved with real estate. If you are a novice in this market and are still wondering whether or not to be a part of it, here are some things you need to know first:
To be in real estate you have to have the right skills involving a careful calculative monitoring of your work. There needs to be a regular maintenance and upkeep of the property along with a good coordination with service providers.
You must have some financial resources to invest in real estate. Although if you are flipping wholesale investment properties, that is, buying properties only to sell them after a short amount of time – bridging loans are also available as an option.
Now that you have a little idea about the real estate requirements, here are the basics that every real estate investor must know:
Overview of Options
Largely, real estate involves buying, selling or renting properties for monetary profit. Now it could be industrial, commercial and residential real estate or just a parcel of land. Amongst them, residential real estate is the most popular option. In fact, most beginners start from this phase. Here you can resell or rent out houses, condos, single family homes and more for greater return. Or, as mentioned before, you may flip houses by selling them a short period after purchase. To accomplish this, a timely renovation is also required to make the house/property look attractive for potential tenants.
DIY or Take Help?
As a real estate investor , there are multifold responsibilities that you have to fulfill – renovation, leasing, paperwork, finding tenants, collecting rent, property maintenance etc. Nick Statman, If you are heading in it as a full time job, you have to be on your toes. Hence a help is always appreciated.
A leasing agent enters the picture here, who handles all or most of the mentioned jobs for a monthly fee. Mostly home investors outsource these services for a smoother and hassle free administration. It is advisable to hire a professional leasing agent with experience, even if she is a bit expensive, for long term profit making.
Being in real estate investment market you are essentially an entrepreneur. As a business owner, you will pay multiple taxes on your investment properties. However, you can ask for tax deductions in some related aspects like operational expenses, costs for running a rental property, mortgage interest, insurance and depreciation.
If you are not in a position to actually deal in properties but still want to reap benefits from this sector, buying shares from Real Estate Investments Trust (REIT) is also an option. They consist of companies that deal in real estate and own multiple properties. The shares are heavily based upon the value of properties, but to experience this market closely, it is a viable alternative.
If you want to make long term investments to reap heavy profits, real estate investment is a valid choice for you! Either way, there is always assistance available for a tiny percent of your profits, taking your revenue to new heights.