Investing In Real Estate Starts With Research
Investing in Real Estate Starts With Research
While no investment is ever a sure thing, one thing is certain and that is that people will always need a place to live. For this reason, many everyday people — and celebrities — funnel their money into real estate. If you’re planning to follow suit, you’ll be in good company, but you don’t want to go into the process blindly. This is one instance where research and diligence is a must.
Pros and Cons
As with all types of investments, there are pros and cons with putting money into real estate. National real estate agency Redfin explains that the downside includes financing costs, marketing expenses, and ongoing property maintenance. However, choose the right property, and you’ll enjoy a passive income from a business model that tends to hold his own in most markets.
Getting Started
One of the biggest benefits of buying real estate is that there are few barriers to entry. If you have the financial backing and credit score to qualify for a loan, there’s nothing stopping you from purchasing a property. Although you will have to compete with other, more experienced investors, Dan Costantino recommends educating yourself. You can do this by joining your local Real Estate Investment Association, listening to real estate podcasts, and reading forums on the topic before you jump headfirst.
The Market
Once you feel like you have the knowledge to move forward, your next step is not choosing a house. Instead, you’ll want to take a look at the various markets in your area. You can start by establishing what you can afford and then looking at ZIP Codes that might support a real estate investment at that price point. Crime rates , school district scores, access to public transportation, and overall cost of living are all important factors when choosing a location for your first flip or rental.
Business Sense
Owning real estate for the explicit purpose of earning a profit makes you a business owner. With this in mind, you also want to explore creating a business structure to help protect your personal assets. For most investors, this is to create a limited liability company (LLC). Though it sounds like a complex process, forming an LLC isn’t that hard and, if you don’t mind using a formation service and doing research on your own, it’s not expensive either. You will also want to open a separate bank account for your real estate business and take steps not to commingle your personal cash with your business funds.
Which to Choose?
As ManageCase points out, there are many different types of properties an investor might purchase. These range from single-family homes to multifamily condominium complexes. There are positives and negatives to each.
For example, you may be able to purchase two or three small condominiums in the same unit for the same price as you pay for a large single-family home. There’ll be more maintenance with the three properties, but you run less of a risk of having a full vacancy. A single-family property will rent for more money, and you may be able to find a more stable tenant for something on the higher end of the price range. There is no one-size-fits-all answer for every investor, so this is another area where research and diligence will pay off in the long term.
When you’re ready to take control of your own wealth, real estate is a great place to begin. But it is not without its pitfalls, and your crucial first step is research. From learning about the different types of real estate to understanding factors that influence the market, the above tips can put you on a path toward making a smart decision that will enhance your family’s income. And when you’re ready to take the leap, consult with Dan today.
Author
Natalie Jones





