Real estate investing is one of the most lucrative ways to earn a passive income or to increase your wealth or income source. The main goal of real estate investments is to get money to do its work today, so there is more money in the future when the value of the properties rise. There are many ways to do this, but where can one start learning the basics of real estate investing? This guide will enlighten you with some of the essential terms and information needed when starting a real estate investment.
In this guide, it will be more than sufficient to discuss the following terms used for beginners to get started in real estate investments: flipping, rentals, wholesaling, finding discounted properties and risk management.
Flipping is a real estate investing strategy in which investors purchase properties with the main intention of reselling them for a higher value. The profit is made either through the appreciation of the price of the purchased property or through renovations done to the property.
Adding furnishings and improving the amenities in the property will increase its value even without waiting for the price increase from the market changes. The flipping strategy is executed in many ways. One way of doing this is by buying numerous real estate properties via mortgages and holding them for a few months before selling them with the hope that their value will have increased. Another approach is by buying one modestly priced property and renovating it before "flipping" it for profit. The cost of the repairs and renovation is sometimes a huge deterrent to investors to flip properties. However, flipping can generate revenue quicker than other methods.
Rentals is another real estate investing strategy in which investors focus on buying a real estate property, like an apartment complex, and running it so they can collect money from rent. Tenants are the main source of revenue from this type of strategy. There are many types of properties that can be used for a rental type of investment. The most popular of them include the use of garages, storage units and office buildings. It is shown that investors right now make a lot of profit from rentals in commercial buildings.
There can also be an ancillary real estate investment strategy in a rental type of approach. This strategy includes putting up vending machines in hospitals and laundry services in budget apartments for additional revenue.
The main goal of the wholesaling real estate investment is selling a lot of homes to a large market of buyers. It’s a bit more complicated than just regular flipping, but the concept is the same. In this approach, three factors are involved: the wholesaler, the investor, and the transfer of the contract. For example, a wholesaler has a $100,000 property that requires $25,000 in repairs but will sell for $150,000 when fixed. The wholesaler sells this $110,000 to an investor and will make a profit of $10,000 without owning a home. There’s a lot of fine print details and oversimplification in this statement, but the essence is here.
Learning the full range of wholesaling is possible if people join, say, the reputable $25,000-worth Rich Dad and Fortune Builders coaching seminars. Many people vouched for the usefulness of the coaching seminar in the beginning to invest in real estate properties. However, many investors have succeeded in starting their real estate career without attending any of the coaching seminars.
Funding and Finding Discounted Properties
With technology making things work so efficiently in real estate investments, discounted properties and lists of funding support are just one click away online. Finding discounted properties means investors need to be quick and the first to get a deal. Another way for beginners to find discounted real estate properties is through bank foreclosures. Getting a subscription online of the list of homes immediately repossessed by lenders after failure of payment from occupants is a good way for beginners to get fantastic discounted deals.
For funding support, it is best to approach a mortgage broker or a trusted real estate agent in your area to get a reliable consult on the best approach for this concern.
The worst thing that can happen to investors in the real estate business is the risk of bankruptcy. That is why the most important thing to do is to make sure the personal assets of the investors are protected. Investors should make sure that they are part of limited liability companies or its equivalent to protect one’s assets should the investment go bust or face lawsuits. It’s wise advice that investors should always prioritize the protection of their personal assets, and that means the 401K and other retirement accounts of the investor should not be touched.
The entire ominous database of information needed in real estate investment is not covered in this guide, but these are the basics that make anyone get into the real estate game with an edge. There is more information needed, but the essentials here will go a long way for the progress of one’s real estate career.