Real estate investing can be very risky, but it can also be highly lucrative. Yes, location, location, location is hugely important, but so who you are dealing with is even more important. However, the world of real estate is filled with shady characters. These are the ones you see on late night telly, promising you untold riches.
If you do really want to invest in realty, you must have the right things. To get started, you will firstly need to have investment capital. Also, make sure that you get to know the real estate market and learn about the neighborhoods you are interested in.
You also have to make sure that you don’t take too many risks. Real estate is never risk-free, but some have much higher risks than others. Avoid tenant-in-common, real estate development, fixer uppers and private real estate funds for instance. With these options, it is highly unlikely that you will see a positive return. Instead, look for good properties and title them to yourself. Of course, this takes a lot of research, analysis and due diligence. Try to find a property that you don’t have to manage intensively and that doesn’t take up too much of your time. Hence, you don’t want to invest in a holiday home, a college home or a property in a bad neighborhood for instance. A better option is a property that someone with a good credit profile is likely to rent for a long period of time. This does require a commitment on your side to treat your tenants with the respect they deserve. There will always be issues with rental properties, but so long as you resolve them quickly, you should have a good investment.
You can also decide to look into a real estate investment trust (REIT). This means you need less investing capital up front, but the returns are not as high either. Working with REITs basically means you invest in other corporations. This can be anything from a construction company to a theme park. A REIT is also listed on the stock exchange and NASDAQ. Basically, they are like mutual funds but focus solely on real estate. Before investing in a REIT, there are a few things to learn about. Consider the key holdings’ economic conditions for starters. Find out how the REIT has performed in the past. You should also consider their future plans. Also find out who the REIT is managed by and what their experience is. A final thing to look into is the state of the current real estate market and how this will affect the performance of the REIT.