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Your Basic Guide to Investing in Real Estate

Investing in Real Estate

Ever had a landlord? Not everyone dreams of becoming one. Fielding calls regarding overflowing toilets and oversized bugs doesn’t seem like the most glamorous of jobs. However, if done right, investing in real estate can be quite lucrative, if not flashy. It can help diversify your current investment portfolio and simultaneously be an extra income stream.

Many of the best real estate investors are not at their tenants’ every beck and call (they have supers for that). The difficulty is that many new investors don’t know how or where to invest in real estate. Here are a few ways you can make a significant amount of money in real estate, ranging from low to high maintenance.

Purchase Real Estate Investment Trusts (REITs)

REITs permit you to invest in real estate without the physical real estate. Unlike mutual funds, REITs own commercial real estates like hotels, apartments, retail spaces, and office buildings and tend to pay good dividends making them a typical investment for retirement. Investors who don’t want or need regular income can automatically reinvest those dividends to grow their investment further.

But should you invest in REITs? They’re a good investmen, but can also be complex and varied. Certain trade on an exchange, while others are not publicly traded. The type of REIT you buy can be a huge factor in the degree of risk you’re taking on, as REITs that are not traded don’t sell easily and may be difficult to value. New investors should generally stick to publicly traded REITs that can be bought through top real estate investment firms. For this, you require a brokerage account. If you don’t have one already, opening one doesn’t take more than a few minutes, and a lot of companies don’t require initial investment (though the REIT itself will likely have an investment minimum).

Use an Online Real Estate Investing Platform

If you’re familiar with top real estate investment firms that connect investors and borrowers willing to lend them money for a variety of personal needs, like a home renovation or a wedding  you understand online real estate investing.

Platforms like these connect investors and real estate developers who want financing for their projects, either through debt or equity. Investors hope to receive quarterly or monthly distributions in exchange for taking on a substantial amount of risk and paying a fee to the platform. Similar to many real estate investments, these are illiquid and speculative – you can’t unload them easily the way you can trade a stock. The catch is that you require money to make money.

Think about investing in rental properties

You can purchase or rent out all of the investment property. Search for someone that offers combined expenses lower than the amount you can charge in rent. And if you’re unwilling to be the individual who comes with a tool belt to fix a leak – or even the one who calls the repairman – you also need to hire a property manager.

Rent out a room

Lastly, you can also rent a portion of your home through a site like Airbnb. It is house-hacking for the commitment-phobic. Airbnb at least somewhat prescreens potential renters, and you don’t have to take on a long-term tenant. The company also guarantees protection against damages, up to a limited amount.

Compared to the fancy concept of real estate investing, renting out a room feels a lot more accessible. You can rent it if you’ve got a spare room.

Similar to every investment decision, the best real estate investments are those that serve you best – the investor. Think about how much capital you’re willing to invest, how much time you have, and whether you want to be the one who deals with household issues when they inevitably surface. If you don’t have do-it-yourself skills, consider investing in real estate through a REIT or a crowd-funding platform instead of directly in a property.

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Investors Guide For Choosing The Top Real Estate Firms To Grow Their Business

top real estate investment firms

People who’ve made huge fortunes by investing in real estate did it by strategizing their approach towards buying real estate properties, analyzing their competition, and understanding the ins and outs of the market. Only then they were able to reap the lucrative benefits of investing in the Real estate market.

If you’re new to the market, then we suggest teaming up with a leading real estate investment firm as they are seasoned players of the Real Estate market and will help you in making the right choice.

People say that you learn by mistakes, but a single mistake in the real estate market could throw you out of the game for good. That’s why we suggest you team up with these companies as they won’t let you make costly mistakes while also educating you about investing in the real estate market.

But not everyone is what they seem to be. It’s a matter of trust and your hard-earned cash that you’re putting in the hands of a real estate firm, that’s why it is important you choose the right company as the future of your investment depends on it.

Looking to find the top real estate investment firms to help you in making the right investment decision? Here are the things you should check before teaming up with a real estate investment firm.

It’s All About Experience

Every day a new real estate company pops up because of the ever-increasing market. We suggest that you go with one that has been in the business for many years. What is the point of teaming with an inexperienced company that is will make the same mistakes as you?

Companies that have hands-on experience in dealing with the real estate market will have a track record to prove their years. You should inquire about their old clientele, their wins and losses, their history, as well as the individual experience of the team members like the real estate agents, brokers, and other experts like lawyers, etc.

Does The Company Understand You?

The second most important thing is that the real estate company should understand your aims and objectives. Before deciding on a real estate company, decide for yourself that your goals are, do you wish to see yourself in the residential real estate market, or you better off in the domain of commercial real estate? Consider this before you decide on a company, and once you’ve figured out your goals, choose the real estate firm accordingly and see if you and they have a mutual understanding regarding your real estate objectives.

Is The Company Open To Teaching And Guiding You?

The top real estate investment firms are known to teach young investors about the ins and outs of the real estate market. Is your company doing the same? There are a few real estate firms that only tell you as much as they deem fit while keeping most of the information for themselves. They believe that if investors know everything, there is to know, then they will see no purpose of the investment firm and will start investing in real estate on their own. However, that is not the case, investors tend to stay with the company as the learning process is never-ending and because the company has also earned the trust of the investor – which is hard to find these days.

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Real Estate Investment Analysis – The Right Way of Doing It

Real Estate Investment Analysis

Analysis is an integral part of real estate investment, investors who want to reap the lucrative benefits of real estate investments should do a complete market analysis before entering the domain of real estate. Rental home investors usually have several units or properties on their hands, but not every property is the same when it comes to cash returns. Some properties might pay off more than the others. Investing in the right real estate property could result in double-digital cash backs, along with consistent cash flows for many years to come.

You might be wondering what do you have to do to get similar cash returns on your real estate investment? Well, we’re about to share the secrets of analyzing real estate investments so you too could reap the full benefits of your rental property.

Analyzing Cash Flow

Evaluating your cash flow is the most important thing before you invest in a real estate property. The more you borrow, the less your cash flow will be. When you subtract the debt service from your Net Operating Income (NOI), then you have your profit. If you pay cash for your property, only then your NOI will equal your cash flow.

The real estate market is always in flux, and your cash flow is directly affected by the on-going changes in the market, along with several economic factors. For example, the demand for a rental property could hike overnight because of a new shipping port or a factory opening in the area; the demand could also plummet when the local business closes and moves elsewhere.

Economic factors

The federal reserve also has a part to play in regulating the price of the property as they could increase the interest rates, which will drive up the basic cost of borrowing while having a ripple effect on the real estate market. This small change could increase the cost of buying new real estate properties, which could result in reducing your cash flows.  

Due diligence is the only solution

Such things are beyond the control of the common man, but no one is stopping you from preparing for these situations. Due diligence about the condition of the local business and keeping an eye on economic news while predicting changes in the interest rates could almost make you immune from all such changes. Keep your contracts and leases according to the market conditions, and your properties will be as profitable as they could have been.

Analyzing NOI

Assessing your NOI is the basis of any real estate investment analysis. To simply explain, NOI is one of the several real estate metrics used by investors to evaluate how lucrative the real estate property could be. NOI is the primary indicator of the property’s on-going revenue, but it does not include capital expenses like loan coats and taxes. If you want to know the NOI of your property, then subtract the expenses from the total income, and you’ll have your NOI.

There are other factors to consider as well like, property taxes, depreciation, insurance, and maintenance while investing in a real estate property, but one thing is sure, if you want to make double digits cash backs on your real estate properties, then you need to analyze every angle and corner of the property before you decide to invest in it.