Real Estate Insights

Real Estate Investing - A Complete Guide To Getting Started

2 years 9 months ago I 0 minutes read I 44 Views

Gary Stringer

Do you know that over the last two centuries, 90 percent of the millionaires have been created by investing in real estate? The best way to develop significant wealth is real estate. We all know real estate cannot be lost or taken away. Over the long term, the net worth of any property goes up. If you are not already investing in property, we can help you get started. It is never too late to make a good decision.
To get started with the real estate investment you need to know first what type of investment you want to do.
<h2 style="line-height: 115%;">Types Of Real Estate Investment:</h2>
Real estate is a lot more than buying land and making money out of it. You have a variety of options to invest in. That is why Real Estate investment is compared to a box of chocolates. Chocolates have a lot of diversity; Dark chocolate, chocolate with nuts, caramel chocolate, coconut chocolate. Similarly, there are few types of real estate investment that you can do; Land, <a href="https://yourdealty.com/buy">residential</a>, commercial and Industrial. 
<h3>Land:</h3>
As one of the famous philosopher, John Stuart Mill said:
“Landlords grow rich in their sleep”
For beginners, one of the safest and easiest ways to get into real estate is investing your money in Land. That means you buy a piece of land in an area you think is worth acquiring in a long term. Take advantage of the high property prices and sell it in a few years.
Investing in a raw piece of land has proved to give potential returns to the investors. They have to deal with very little competition. You can either do nothing with the vacant land or you can turn the raw land into and improved land. The improved property would give you a higher return than the underdeveloped. 
<h3>Residential:</h3>
Residential real estate is the most common and known form of investment. You can buy a single-story or a <a href="https://yourdealty.com/buy/home/4190-n-ruger-dr-idaho-falls-id-83401">multi-story house</a> and sell it for a higher price. To make a greater profit out of it you can refurbish it. Renting it out is also an option, it can generate an ongoing passive income.
And if the value of the property goes up, you can use it as a strategy to build wealth. As 
“The best investment on earth is earth”
<h3>Commercial:</h3>
Commercial properties are usually bought and rented out for business purposes. If you are a beginner, this is not the option to start with. Although commercial real estate is more niche than residential investing, it needs a lot of capital to be spent and more tax regulations are there to think about. 
For example, you own 6 floors building and rent out each floor; to a <a href="https://www.walmart.com/grocery">grocery store</a> owner and various other brands. The tenants will use the floor space and give a monthly rent to you. If you have enough funds to purchase a commercial property, the cash flow would be higher, since there are fewer buyers for commercial properties. You would have less competition. 
<h3>Industrial:</h3>
If you invest in <a href="https://www.merriam-webster.com/dictionary/warehouse">warehouses</a> or any large-scale factory, that is considered an Industrial investment. It is a very sound investment choice, but it comes with a lot of complexity. Since it’s a large property, more management is required. As compared to the residential and commercial properties that give you a rental return of about 4 to 6 percent, the industrial investment gives a rental return of about 10 percent.
<h2>Ways To Make Money In Real Estate Investing:</h2>
Now that you know what sectors to invest in, you need to have a piece of knowledge about how to make money out of it. Real Estate has generated more wealth than any other industry but people still remain cautious about joining this path. The common misconception is that you need to be a landlord in order to deal in Real Estate but that’s not always the case. If you know what you are doing, even if you are starting out, you can still make money. Here are several ways you can make money in real estate:
<h3>Renting It Out:</h3>
The most common form of earning money through investing in real estate is renting it out. That gives you a consistent income at the start of every month. If you have a two-story house, you can live on the ground floor and rent out the first floor to a family. This way you don’t have to worry about the maintenance and repairs and it’s a good amount of side income. Renting out a commercial property has higher returns as it is mostly rented out to a business.
<h3>Flippers:</h3>
Another way to make money is by <a href="https://en.wikipedia.org/wiki/Flipping">flipping</a> the contract. For example, you can find a really nice house in a nice neighborhood or you could buy a commercial property in a high-value market. You make a deal at, say $85k. now you find a buyer for the same property. Negotiate the contract at $95k. At the closing table, when the buyer brings in $95k, $85k goes to the seller and the rest of $10k goes into your pocket.
In this case, you don’t have to worry about any lenders or your credit score. This might seem very interesting and easy but you need to have all the knowledge of the real estate market to make profits this way.
<h3>Buy And Hold:</h3>
“Don’t wait to buy real estate, buy real estate and wait”
Buying a house to resell it in a few years when the market is right is another strategy. This is called the fix and flip strategy. Investors are not looking for a property to live in or to rent it out. They buy a house at any property at a discount, they fix it up or renovate it if required to improve its worth. They might hold on to it for some time waiting for the right time. Or if they get a buyer offering a higher price. They sell it. 
<h3>Collecting Interests:</h3>
In this case, you act as a third party. You are indirectly involved in the real estate investment. For example, another person is looking for cash to buy a property. So, you lend them the cash and earn a specific interest on it. You basically act as a lender or a bank whose lending them money. When they will pay you back the money, you will earn a certain amount of interest on it.
<h2 style="line-height: 115%;">How To Get Started With Real Estate Investing:</h2>
You are already aware of the benefit this career choice awards but it certainly demands a degree of commitment with which many may be unfamiliar. You know the common ways to earn money through real estate, now it’s time to figure out which route is the best. Have a look at a few real estate investment strategies:
<h3>Be An Active Investor:</h3>
An active investor has a very active role in the day-to-day aspects of the investments. Active investors have to invest more time out of their day to look over the deal activities. For example, an active investor would select which property to buy, based on personal preferences. He would himself renovate it or get it done by hiring a professional. But he has to be there to get the job done. An active investor would find a buyer himself if he wants to flip the contract. It’s a full-time job, the more you invest your time and effort, the higher returns you are likely to get.
<h3>Become A Passive Investor:</h3>
On the other hand, if you have a permanent job you can become a passive investor. Being a passive investor, you don’t have to worry about all the responsibilities at all. You just have to invest your money and wait for the returns. Usually, a passive investor hires a property management company to take care of all the buying and selling on the cost of management fees. Passive investments require less of your time and involve lower stress. A perfect example to explain the life of a passive investor is if a pipe bursts out at 3 in the morning. A passive investor wouldn’t even need to know while an active investor would get a phone call.
<h3>Hiring A Real Estate Agent:</h3>
Being a beginner, you obviously don’t have enough knowledge about the real estate market and you want guidance from someone. Working with a real estate agent you can trust can solve your problems. A good agent knows what’s a good investment and what’s a bad investment. You just have to pay your agent a certain commission and he will put your investment to good use. Whether you want to buy or hold property or you want to sell it for profit. He will take care of all the market search. This would save you hundreds of hours.
<h2 style="line-height: 115%;">Conclusion: </h2>
Investing in real estate remains true means of building an individual’s cash flow and wealth. Like any other investment, it has pros and cons as well. You don’t begin to build wealth instantly. Real Estate involves lower risk than the stock market. You would have steady cashflows if you have enough rental property. The tax rates are lower. On the other hand, real estate is a long-term investment, it takes time for the land to appreciate and deliver profits. Also, you cannot <a href="https://en.wikipedia.org/wiki/Liquidation">liquidate</a> the property quickly as you do in stocks.
Flashback to the fall of 2008, when the housing market of the US collapsed. It was the largest price drop in history. The housing prices fell 33 percent during the recession. It dropped to a level where people could afford the houses which they could not afford otherwise.
If you are buying a house, it would be a good investment because homes are cheaper during a recession but if you have enough property and you want to sell it. You might not want to do it during such extreme conditions such as the recession due to the low prices. 
“Life is uncertain and sometimes unpredictable, so you cannot be right all the time”
If you are looking for a place to buy and sell property, or you are looking for a professional agent. Visit <a href="https://yourdealty.com/">Dealty</a>!

Gary Stringer

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