Real Estate
What is real estate?
While there may be many ways to invest your money, nothing
can be as risky, or as lucrative, as real estate is. And if it's because of the
cash flow, the appreciation, the tax benefits or for personal reasons,
investing in real estate can be rewarding in more ways than one.
Real estate cannot be lost or stolen, nor can it be taken.
Purchased with common sense, paid in full and managed with reasonable care, it
is the safest investment in the world. - Franklin D. Roosevelt
Types of Properties
Residential
The home is where the heart is ... and where the investment
portfolio begins. Most real estate investment newbies simply start with owning
their own home. More experienced investors will focus on commercial,
multi-family and other income-producing properties.
Individual and Multi
Family Properties
These are generally known as the types of property that
offer the most stable performance within a market that is the least volatile
since people always need a place to live. Multi-family properties are popular
options for beginners in investments: living in one unit while renting out the
other (s). Examples: (duplex / triplex).
Departments building
With higher occupancy, most operating expenses are covered
by tenants.
Commercial Real
Estate
Office buildings where businesses and small businesses would
pay rent to use the property.
Industrial Properties
Special purpose properties that generate rental income from
tenants and sales of customers using the facilities (storage units, car washes,
etc).
Retail
Showcases, shopping centers or shopping centers.
REIT
Real estate companies that are publicly traded. Similar to
the stock exchange, but for real estate; You buy real estate as shares, and can
be sold in the short term.
Investment strategies
While there are some different approaches to real estate
investment, the first step is to find a good business. Short sales,
foreclosures and tax auctions are some ways to find a large amount in a
property.
Knowing the Risks
Most experienced property investors will never buy the
investment real estate directly in their own name to avoid personal
responsibility (define: a financial obligation for which an individual is
responsible for). As a protection measure, it is recommended to buy only one
property as a Limited Liability Company (LLC) or Limited Company (LP).
Answer financial
questions
How will you finance the investment? What are all the
expenses involved in the purchase and management of the property?
A good rule of thumb to use when determining how much you
should plan on expenses for expenses is known as the "50% rule,"
which states that, on average over time, expenses on a property will be equal
to 50 percent of the income.
Have an exit strategy
If you are planning to enter, you should always know how to
exit.
Real Estate Benefits
Fiscal benefits
Long term profit rate
Deductible mortgage interest and property taxes
Tax free benefits
Tangibility
Real estate is one of the few things that can put your money
in that you can really see, touch and feel. You can inspect your property and
take actions to make it better and more valuable.
Cash Returns
There are two basic ways to get benefits from real estate
investments:
Tenant rental
payments
Capital returns:
The increase or decrease in the value of the property due to changes in market
demand and / or inflation.
Where to find
properties
The MLS (also known as the Multiple Listing Service): the
most widely distributed list of properties for sale.
Real Estate Agencies:
Normally they have printed listings in view of everyone, so
you can see at a glance some of the local options.
Websites /
applications: Craigslist, Realtor.com, Redfin, Zillow. There is a lot of
information about what is for sale and recently sold.
Driving:
It may be old fashioned, but it certainly still works! Check
out the neighborhoods you like, and the areas that you think would be
marketable for the properties that are available.
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