Real Estate Investing

BE PATIENT

Real estate is a long term game. There is no get rich quick scheme. If someone tells you there’s a fast way to get rich or there’s a guaranteed profit, they’re lying. Real estate is about building equity in the long run. You can take more calculated risks sometimes for the right opportunities but don’t count on it every time. Be patient in the process, learn from mistakes, be smart and the money will follow.

Should you flip houses?

Flipping houses can be extremely profitable but comes with many risks. It sounds easy because people tell you all you have to do is buy a property, renovate it and resell it for a higher price. If it was this easy everyone would do it and make a profit. What you don’t know is that a majority of people lose money because they are not careful. You should only consider flipping houses if you have experience in real estate and renovations. You have to pay attention to detail in order to be successful. It’s important to make sure you have a strong team with the experience. Make sure you have enough capital for the renovations because it will always cost more than estimated. Prior to buying the property make sure you do your due diligence. Don’t just buy a place simply because it’s cheap. Find out why it’s cheap and how much you can realistically sell for. Research about the market, area, average prices, and days on market. Also make sure you get the place inspected prior so you know what renovations you will have to do. Do a thorough walk through and pay attention to details on what needs to be repaired. Any structural damages will be costly to repair and can cut deep into profits. Make sure you have the time and money to see the project through. If you have a full time job and a family to look after, this might not be the project for you. Dealing with renovators can be a pain and you have to watch over all the details that they may miss and watch out because some of them like to cut corners to save them cost and time. My best advice is to start with smaller projects to gain some experience because you are going to make mistakes. The best way to get in is to partner or shadow someone with experience for your first couple so you can get a feel if it’s for you or not. You should look at at least 50 properties before you decide on one.

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Why invest in real estate?

Investing in real estate is amazing because it’s a tangible asset which means it’s something you can see and feel. Whereas with stocks and equity, you own shares but it’s not physical. This makes you feel at ease because it’s an investment backed by brick and mortar. Real estate markets provide stable income returns. In the long run, real estate prices will generally go up even though there are ups and downs to the market. This is also a great way to diversify your portfolio because you shouldn’t put all your eggs in one basket. Diversifying helps decrease your risk and volatility and will help balance out your other assets. Real estate is correlated with inflation and will increase in price as the prices of other goods increase in the economy. Real estate allows you to leverage debt better than some other investments. This allows you to borrow more money and let that money grow for you. This type of investment is great for making passive income.

There are many ways to invest in real estate. You can invest in investment trusts which are pools of money from many investors but you don’t get to decide what the pool invests in. The only benefit is that you can invest in how ever much you can afford. It is least expensive compared to some other types of real estate investments but the returns are low, the fees are high, and it’s hard to liquidate if you want to sell. You can also invest by flipping houses. So buying land or a property in a good location and rebuilding it and selling. But this is extremely capital intensive. You will need a ton of capital to not only pay off the land but to also build. The risks are higher as well and there is more to lose. Dealing with builders can also be a headache if you don’t understand the process. This is not recommended for beginners because it requires more skill to execute. The final method of real estate investing we will be talking about is rental investment. This means purchasing a property with the intention to rent out. This could mean commercial or residential. This methods good because its less risky and less capital intensive. It’s also an easier process to understand and manage. Done correctly this can bring passive income and positive cash flow each month. This is also a great way to leverage debt and build your wealth. The downside is the occasional stress of vacancy and structural issues. I would recommend hiring a property manager to manage your properties because your time is expensive. Just make sure the rates are reasonable and you do your due diligence and research. It’s extremely important to research about different types of investments and their risks before diving straight into it. Also understand how properties work in your city and area because every place is different. Don’t forget to always consult a professional about the laws and rules in your area.

That’s all the time we have today and just want to thank all my readers again for reading my material.