5 Beginner’s Tips to Investing in Real Estate

If you’re looking at real estate as an investment for major wealth creation, there’s a lot you can do with it that can in fact build up your portfolio or bring profits into your bank account. However, there is a lot of risk that comes with real estate, and you will need to have a little patience to start seeing your hard work investing in it pay off. You have consider things such as whether you want to invest in residential or commercial properties, what kind of financing you’re going to use, whether you’re going to be working with construction contractors, and any legal issues that could arise from property development. But there are five tips you can follow for real estate investing that may help you out.

Before you get started in real estate investing, you want to make sure you’re acquiring properties in a local market where real estate in general is in demand and property values are relatively stable. You’ll want to know things such as how quickly residential and commercial properties are bought, how high in demand rental units are, and the kinds of revenues most property owners bring in. The best places to invest in real estate, especially residential are areas of the country that are thriving economically and where median incomes are usually pretty high.

Investing in real estate doesn’t mean you have to actually be a hands on owner of a physical property itself. You can own what’s known as a real estate investment trust (REIT) which is a little like owning stock in a property. A company will usually own a set of properties either residential or commercial, and REIT holders will own a portion of those properties. Buying an REIT is done through a broker or online trading platform, and this option basically allows you to own a stake in a property even if it’s not local. They may not be ideal if you prefer to be very hands on with your real estate investments.

When you’re purchasing a property but intending to sell it in the short-term, or you don’t intend to go with a traditional mortgage, there are other options. If you know how to flip a home, or renovate and rehab a rental property, you may want to consider an alternative loan to finance your purchase. A hard money loan or bridge loan for example, can be funded to you from a non-banking firm, and they’re generally interested more in the property’s value and how it will be renovated or rented out as opposed to being held long-term. Plus alternative financing like this doesn’t usually come with nearly as thorough credit checks.

Assuming you are intending to make most of your real estate investment returns through rental income, going this route means you should be working with a reputable property management company. They will usually be the ones maintaining the property and filling its vacancies, so you want to know that you’re paying a company to do this that delivers results. You may want to get personal recommendations or check reviews online very thoroughly about a property management company you’re considering.

If you’re a first time real estate investor, you don’t necessarily need to get an advanced business or finance degree to learn about it. But there are workshops and seminars out there where other experienced investors are willing to share their information with you on how to find good properties to invest in, and things you may want to know if you’re flipping homes. You don’t always have to attend these in person either since there are online video sessions that allow you to glean information. Although in-person seminars may be more helpful if you need to ask questions about real estate.