6 Basics of Real Estate Investing

Our team speaks with a number of people every year who are interested in property investments. Folks are typically searching for ways to diversify their portfolios or to create monthly cash flow that works alongside their day job, as a passive income stream for today and for the future. Real estate offers a solid investment opportunity that can provide investors this income stream, but also the benefits of long-term value appreciation and tax advantages.

It’s never too late to begin investing in real estate. There are a number of properties which can offer solid investment opportunities. Regardless of the ups and downs of the market, people will always need houses, commercial buildings, apartment complexes, condominiums, and storage facilities, so real estate will remain a good way to create wealth. With all the recent market fluctuations and historically low interest rates, even a first-time investor can realize profit and positive cash flow with careful planning and research. 

By understanding some of the basics of real estate investing, you can begin to create a successful investment plan.

• Start Now – Every market offers various opportunities for buyers; there is no perfect time to get started as a real estate investor. Most of the people interested in real estate, never make their first investment due to fear, lack of experience, or lack of funds. Start learning now to understand how you can overcome all of these barriers.
• Understand Your Risks – Before investing, you should be certain that you can afford the property, obtain appropriate financing, create adequate annual cash flow, and hold the property until market conditions are right to sell. It’s also important to work with the right professionals who can help you set your property investment up for success!
• Do Your Homework – Do research on markets you are interested in and areas you believe to be quality markets. If you don’t know where to begin, ask a trusted professional on how to assess various markets. You should know the specific market and understand the property trends which can affect your purchase and ownership over time.
• Understand Expected Cash Flow – In simple terms, cash flow is what is left over after you collect rent and all your expenses are paid. For a rental property, expenses could include mortgage, interest, maintenance, insurance, utilities, and more. For commercial properties the expense list has the potential to be longer and details get more complex; but these properties can also offer great returns over time.
• Budget for the Unexpected – Even the most carefully planned projects can have unexpected costs. Your plan is to have monthly cash flow and income over time, but sometimes issues arise that will require more time or money than expected. It is important for real estate investors to have a back-up plan to address these potential costs.
• Invest for the Long-Term – Real estate investing should not be viewed as a “get rich quick” scheme. While you might find an opportunity to have a quick flip, most successful real estate investors have had equity in property realized over years, not months.

If you are looking to invest in real estate, please Contact Us to start the conversation on options and to begin looking for properties in 2021. If you start building your real estate portfolio now, a real estate purchase could provide a low-risk addition to your other investments for both income and long-term asset value.  We look forward to helping you search for properties and investment opportunities in 2021!!