A Beginner's Guide to Real Estate Investing

Last updated - February 15, 2023

A Beginner's Guide to Real Estate Investing
Residential Homebuying


Photo by Ralph (Ravi) Kayden on Unsplash

Real estate is one of the most profitable investments in the world. The world’s real estate market, according to Savillis, is valued at 326.5 Trillion in 2020. Of that, residential accounts for 79%. The real estate industry’s success is not far-fetched, and it's an investment that doesn't get too affected by recession or inflation historically speaking.

Real estate properties cannot liquidate except if sold or transferred by the owner. It's also an essential need, solving one of the humans’ basic needs. Therefore, it's always a great idea to invest in some property. Unlike popularly believed, investing in real estate doesn't only mean getting a place for yourself or a rental. You can get commercial properties to lease. Also, industrial properties can be an investment, and buying raw land to sell when it appreciates is also a sensible way to earn from real estate.

Investing in real estate has also gotten easier over the years. For instance, you can now easily get installment loans online to purchase your property. Real estate is an asset on its own and should be a part of a great portfolio. However, you need excellent knowledge about investing in real estate to do it properly. Therefore, let us start by learning some property types to begin your real estate investment journey.

Rental Properties

Rental properties are prevalent in real estate investment. It involves having a property and renting it out to a tenant on a yearly or monthly basis. Rental properties include air BnB, residential homes for rent, and commercial space for rent. When you are a rental property owner, you are the landlord and might have extra responsibilities like marketing, maintaining, and managing the building. It might involve learning skills like customer service, home management, cash flow analysis, etc.

However, you can simplify the processes by getting a property manager. Rental properties are excellent as they can generate monthly passive income. However, rental properties can be capital-intensive. Also, it may take a long time to recoup the money invested.

House/Land Flipping

Land/House flipping involves buying land or a house and selling it. Land and house flipping come in different ways. For instance, land flipping can mean buying a landed property, holding it until it gets expensive, and then selling it at its peak. It may also involve purchasing a piece of land, developing it, and reselling it.

House flipping also involves buying damaged, inhabitable houses or buildings with low prospects at low prices and then revamping them to make them more beautiful and then reselling them. It can allow you to bring out your creativity, and you only need a little money to start it. However, it may take a while to sell the properties. Also, house flippers sometimes buy houses with more problems than anticipated.

Trusts And Partnership

There are different types of real estate trusts and partnerships, like the Real Estate Investment Trust (REIT), Real Estate Limited Partnerships, and Real Estate Mutual funds, among others. Real estate trusts and partnerships can be advantageous as you can get into them with lesser money. Also, you do not need to monitor the property yourself; you can trust the organization to do it for you, thereby saving your time and energy.

How To Begin Investing In Real Estate

Now that you know the properties you can invest in and what they can generate for you. It's time to start investing. You can follow these steps to begin your real estate investment journey.

  1. First you want to connect with a qualified real estate agent. One who is an investment specialist that can aid in your search, negotiations, and establish management processes for the property you select.
  2. Research. It never hurts to learn. Learn about buying a home, maintaining it, renting it, and selling it. Having adequate information will help you make the right choices and prevent you from making mistakes.
  3. Identify the Booming real estate market. First, research the demand for different types of real estate properties in your area. Then, identify the best potential, weighing the pros and cons.
  4. Raise funds and get the details right
  5. Know the law. Learn about tax, rental rules, and insurance, among others. Having adequate knowledge of the law will save them from its jaws.
  6. Invest and monitor your investment. Now that you have put some work into investing in real estate the right way, you can put your money into it. Also, ensure to monitor your properties after purchase. The work doesn’t end with getting a property.

Final Thoughts

Real estate is a growing market that doesn’t seem to want to dwindle. Real estate is an asset that can help the owner hedge inflation and recession. Also, it has minimum risks and can help a person fly fast. It's, however, vital that you know about real estate before investing in it. This guide has provided an excellent background on which you can easily start your real estate investment journey.

Post a Comment