Approximately 15 percent of Americans currently invest in real estate properties (outside of their own homes). Are you looking to join this small but mighty group? Do you want to earn passive income and grow your wealth?
If you’re interested in getting started in real estate investing but aren’t sure where to begin, keep reading.
Explained below is everything you need to know, from the benefits of real estate investment to tips on managing your properties.
Why Invest in Real Estate?
There are lots of reasons why real estate investing is a smart strategy. The following are some of the greatest benefits it has to offer:
Earn Passive Income
When you invest in real estate, you’re often able to bring in additional income without having to do a lot of work. This is a great way to grow your wealth and start saving for the future.
Enjoy Tax Benefits
There are a lot of tax benefits associated with real estate investments, too. For example, you don’t have to pay self-employment taxes on rental income.
You also get to enjoy tax breaks for things like insurance payments, repairs, travel expenses, and legal fees.
Call Your Own Shots
Whether you decide to make real estate investing your full-time gig or your side hustle, you get to be in charge and call the shots. If you like the idea of earning money without a boss breathing down your neck, real estate investing might be a good option for you.
Should You Invest?
Okay, you’re convinced that real estate investing can be beneficial. Is it beneficial to you, though?
If you’re on the fence, consider your answers to the following questions. They’ll help you decide whether or not real estate investing is right for you:
Am I Able to Secure Financing?
One of the first things you need to consider as a future real estate investor is how you’re going to finance your purchases.
Do you have the cash to buy your first property? Do you have good enough credit to secure financing from a lender?
Can I Keep Up with Ongoing Maintenance?
Remember, your work isn’t finished after you buy a property and fix it up. Ongoing maintenance is required to keep it in good shape and ensure it’s suitable for tenants.
Can I Keep Up with the Demands of Being a Landlord?
If you plan on renting out your property once you’ve bought it and fixed it up, you’ll need to make sure you’re comfortable being a landlord. This means taking calls in the middle of the night when something goes wrong and handling tenant disputes.
If you’re not up for the job, can you afford to hire a property management company to handle it for you?
Can I Stay Calm When the Market Changes?
The real estate market ebbs and flows just like the stock market.
Are you able to stay calm and weather the storm when the market drops? Can you avoid making rash, emotion-based decisions?
If you’re able to keep your cool, you’ll be able to come out on top more often than not as a real estate investor.
Ways to Invest
Keep in mind that there are lots of different ways to invest in real estate. Here are some of the most popular options:
- Buying and Renting Out Properties
- Fixing and Flipping Properties
- Invest in REITs (short for real estate investment trusts)
- Invest in Real Estate Mutual Funds
- Invest in Real Estate ETFs (short for exchange-traded funds)
Even if you don’t want to buy a physical property, you can still benefit from real estate investments. Talk to your broker to see which trusts or funds they recommend for you.
How to Choose Your First Property
If you’re ready to invest in real estate and want to buy a tangible property, you need to do your homework before making such a big purchase. Listed below are some essential tips to keep in mind when choosing a property:
For most people, it’s best to start small with a single-family home. Another option is to buy a multi-family property with a unit where you can live. That way, you’re already on the scene should someone need you.
Choose the Right Location
Make sure you get more info on the location of a property before purchasing it.
How close is it to shopping centers and other amenities? What are the schools like? Are there any neighbors who may cause problems?
Location is one of the most important things people consider when looking for a place to rent or buy, so make it a top priority.
Consider the Cost of Repairs
If you’re buying a property that needs repairs, be sure to think about the cost of those repairs. Do you have the budget for them? How soon will you see a return on your investment?
Tips for Better Investments
Choosing the right property is a huge piece of the puzzle when it comes to successful real estate investments. There are some other things you should keep in mind, though.
Here are some additional tips to remember that will help you become a true real estate investment success:
Always Have a Plan
Play the long game and have a plan for how you’re going to profit from your new property. Real estate investment definitely isn’t something you want to “wing”.
Research the Market
Make sure you’re continuously researching the market. It’s always evolving, and you need to stay on top of it if you want to succeed long-term.
Don’t Work Alone
Gather a team of people to help you with your investments. An accountant and a real estate lawyer are two essential people you ought to have working with you on every purchase. Don’t underestimate the value of a great realtor, either.
Getting Started in Real Estate Investment Has Never Been Easier
The idea of getting started in real estate investment sounds intimidating at first. There’s so much information out there, it’s easy to get confused and overwhelmed.
If you keep the guidelines outlined above in mind, though, you’ll have an easier time sifting your way through all the noise and figuring out an investment strategy that works for you. Remember these tips and you’ll be ready to invest in no time.
Do you want to learn even more about real estate investment? If so, head to the Real Estate section of our site today to continue your research.