Easy steps on how to start investing in real estate
A simple look at what real estate investment entails.
Choosing to invest in real estate can be both appealing and challenging at the same time especially if you are just starting out. When most people say they want to start investing in real estate, they usually mean buying property with the hope it ultimately appreciates and increases in value.
As easy as it may sound, sometimes things don’t go that way because of inadequate planning. Before investing in real estate you must be clear on why you want to go into the property market in the first place. Outlining your reasons and goals can help streamline the process of you getting into property investment.
Factors to consider before investing in real estate
- Are you looking for long or short term investments?
- How much money are you comfortable investing?
- Are you looking to augment your investment with loans?
- Do you understand the different types of property investments?
- Are you looking to be an active or passive investor?
- Do you have rules and strategies that match you financial goals?
- Do you understand the return characteristics and risk factors associated with real estate investments?
If you still don’t have a clear path after answering the above questions its best at this point to consult the experts.
Do not be tempted to jump into something you are not sure about simply because it looks good at the moment. By doing so you not only risk losing your investments, but also sinking into financial misery.
Sometimes the best thing you can do is source the advice of a local mentor. Ideally it should be someone who is already making money and investing in your area of interest.
Learn from their mistakes so that you don’t have to repeat them when you start investing in real estate. Once you are aware of how the property market works, you can go ahead and look at the following forms of property investments.
Common forms of real estate investments
- Rental properties.
The property can either be residential or commercial. Fundamental rental properties are the oldest forms of real estate investments.
An investor purchases property and rents it to tenants. He/ she is responsible for maintaining the property, collecting rent and paying taxes. - Real Estate Investment Trust (REIT).
If you are looking to invest in real estate in a way similar to stocks, REITs are the best options for you. This is a company that owns a variety of commercial properties that generate income. They lease property and pay dividend to investors. - Real Estate Investment Faction.
Works almost like fundamental properties. The only major difference is that companies construct properties, sell them to investors and manage the property in return for a certain set percentage of the rent.
In other words, investors who wish to own property but do not want to deal with the stress of being landlords transfer management tasks to the company at a fee. - Flipping properties or houses.
In this case investors purchase properties at low prices. Thereafter, they renovate and sells these properties after a short time usually a few months to a year and make profits.
Sometimes the property may not be in a bad condition but could simply be undervalued. It’s important to note however, as easy as it may sound, flipping is not easy.
Doing your research and seeking advice when starting is essential lest you lose money.
Conclusion.
There are various ways to start investing in real estate that do not require a lot of money. Understanding what you are looking for and how much you are willing to spend is a great place to start. Afterwards, identifying how you want to actually invest in reals estate, be it REITs or fundamental properties will help you achieve your goals.
