Beginner’s Guide to Real Estate Investing

If you are looking for a secure & healthy investment try making the smartest money move by investing in real estate. Real estate investing is simply buying real estate. The goal is to invest your money, let it grow, and be able to cover other expenses with the profit you gained. 

Real estate is a perfect investment, but navigating the structure and doing it right can be difficult. It is like playing monopoly, you must fully understand the concept, basic factors of the investment & the risks. To win, you must purchase homes, avoid bankruptcy, and produce rent in order to purchase more assets.

4 Ways To Make Money in Real Estate Investing

There are several ways to make money when investing in real estate:

Cash Flow Income

This type of real estate investment is about  acquiring and running a real estate property. You purchase an apartment building & operate, because you want to generate a steady flow of income from your tenants. You can also generate income from storage units, office buildings,retail  businesses, and rental properties.

Real Estate Appreciation

If the value of a property rises as a result of a shift in the real estate industry, this is known as appreciation. For instance, when a new shopping center is constructed, nearby land surrounding the property will become scarcer or busier. Or you could have improved the house to make it more appealing to prospective customers. 

It is a big gamble, it is unpredictably volatile, making it riskier compared to investing in cash flow income.

Real Estate Related Income

Real estate agents are specialists in the real estate industry who earn commissions from the properties of people who need help in buying and selling their houses, or real estate management firms, who hold a share of rentals in return for handling a property’s day-to-day operations, produce this revenue

Ancillary Real Estate Investment Income

This can be a major source of income for certain real estate investments. Vending machines in office buildings and laundry services in rental apartment complexes are examples of ancillary real estate investment profits. They act as mini companies inside a larger real estate investment, allowing you to profit from a semi-captive client base.

Tips for Investing in Real Estate:

  • Check if you have a good credit standing before buying real estate. Consider getting a secured credit card to restore your credit score.
  • Buy your first real estate investment in a variety of ways. You may use debt to purchase a home by taking out a mortgage on it. Many real estate owners are drawn to equity because it allows them to buy properties that they cannot afford.
  • Try acquiring real estate investments in forms of legal entities like limited liability corporations or limited partnerships. Instead of having it under your name to avoid risks & protect yourself. You may get legal advice from a lawyer to determine which ownership approach is appropriate for you and your situation. 
  • These legal entities can protect you if the investment fails, resulting in a lawsuit. The least that can happen is you lose the money you’ve invested. This will give peace of mind knowing that your retirement funds and other investments are safe. You invest in a business that owns commercial properties such as office buildings, apartments, restaurants, and department stores.
  • Consider flipping houses. Buying a house for a cheap price, renovating it, and then selling it for a profit. There is a higher level of risk that you must correctly estimate construction costs and sell fast in order to reduce the length of time you spend on the house. Bear in mind that there’s still the possibility that the house won’t sell or that it will take a long time to sell. Timing is important in flipping houses, you must know the best time to sell or if the risk is worth it in acquiring the property. 
  • Try REIT or Real Estate Investment Trust. Investing in real estate with a REIT helps you invest without owning the land itself. REITs are similar to mutual funds except that they invest in real estate. You invest in a business that owns commercial properties such as office buildings, apartments, restaurants, and department stores.

Start by doing your homework, research, and think about your short & long-term goals. Real estate investing for beginners may seem challenging, but there are experts who can help you understand the business & the market.

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