Real estate is a great investment option for those who want to achieve financial success. Becoming a successful real estate investor is a great step towards achieving that much desired financial freedom.
Real estate is a challenging business that requires knowledge, talent, organization, networking, and perseverance. Becoming knowledgeable and educated about the real estate market is crucial, but often this comes with more than just in-class learning. Understanding the risks, investing in an accountant, finding help, and building a network is all part and parcel of the successful real estate investor.
- Be financially prepared: Real estate is a particularly expensive investment. You need to have cash on hand for a down payment, partnership share, or to buy a property outright. Before getting started, establish an emergency fund, pay off consumer debt, and automate your retirement savings.
- Keep it simple: A simple strategy can go a long way in real estate investing. If your goal is to generate passive income, don’t be fooled into believing you need to go big to make it happen.
- Buy Cheap: Real estate investing can be compared to investing in a dividend-paying stock. The return on investment is based on how cheap you bought the commodity. However, you have to look at the return on the investment. A cheap little house in an unsafe neighborhood can be bought for little money, but you won’t get much money from it, either. So, instead of focusing on buying a house, focus instead on buying land or an off-plan. You buy cheap, save money and gain more as the year goes by.
- Maximize Value of Real Estate: look for ways to maximize the value of the real estate, eking out more profit for the same investment property. It could involve renting out a corner to a bank to install an ATM. You could rent out space in the lobby for a small commissary, generating rental income from what otherwise failed to add to the business’s cash flow. In an apartment complex, you can look for value-added services. For example, offer trash pickup from someone’s door to the dumpster for a modest fee per month.
- Consider Non-Traditional Real Estate Investments: Remember that real estate investing doesn’t have to equal a choice between investing in single-family homes and apartment buildings. You could invest in office buildings, storage unit complexes, industrial space, and warehouses. All of these generate rental income. In the case of offices and industrial buildings, you may be able to reduce overall costs with a triple-net lease where the tenant covers basic insurance and pays the property taxes and maintenance. Your investment then yields steady cash flow with few out-of-pocket expenses.
In conclusion, real estate investing may be more accessible than you think, and there are multiple ways to get involved in this often lucrative asset. Bear in mind real estate as a whole is a relatively illiquid asset. Projects can take a while to execute and to pay off. So whenever you think of real estate, you almost always have to think of it as a long-term investment.
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