Investing in real estate is one of the few ways for the average person to gain wealth. Can you become rich overnight? Not very likely. Real estate investing should Romeo Abdo be considered a long term strategy that can gain you tremendous amount of wealth over time but you must do your homework first. The majority of people that are getting into the real estate investing market are simply purchasing a home in an area that they are familiar with and then wonder why they are not rich after a couple of years.
Do a search on the internet for real estate investing and you will find hundreds of ways to get rich quick through real estate investing. And it’s true, if you are selling books, DVDs or real estate seminars you can become wealthy in a short period of time. If you are investing in real estate it is just not going to happen without the proper up front research.
There are three main points you must consider before purchasing your first property and they are location, location, location. This is a rather simplistic view of real estate investing but it has never been more true than today. Thousands of people are getting into the real estate market, and yet over 90 percent of the foreclosures in the market today are from non owner occupied homes. This means that people that have purchased a vacation home or purchased a second home for investment purposes have gotten into financial trouble. This Usually happens because they did not purchase that asset in the correct location at the correct time. So the question is, how do you find the correct location to invest?
Real estate investment has gained popularity over the last five decades. Although this market has numerous opportunities for large profits, owning and purchasing real estate is complex compared to bond and stock investment. It is thus, crucial to learn how to invest in real estate for one to increase their wealth. The following sections describe various forms of real estate investment and what they entail.
Fundamental Rental Properties
This is the oldest form of investment. In this instance, an investor will purchase property and rent it to tenants. The landlord will then be responsible for mortgage payments, taxes and property costs. Ideally, landlords’ charges cover these mentioned costs. In other cases, the landlord may charge extra to cover costs until mortgage repayment but, it is strategic to exercise patience and only charge for expenses until the payment of the mortgage. At this time, most of the rent will turn into profit.
Moreover, property will have value appreciation during the mortgage course. In this regard, the landlord’s asset will be more valuable. There are some downsides to what may appear like a perfect investment. One can end up with tenants who destroy property or worse, lack tenants in the first place. This leaves one with a negative flow of cash. There is also the issue of locating the correct property. One should choose an area with low vacancy rates besides an area where individuals will prefer to rent. One should note that this form of investment comes with enormous responsibilities.
Real Estate Investment Factions
These resemble mutual funds for leasing properties. For those who wish to own rental properties but do not want the hassles of being landlords, this provides a good solution for them. In this case, a company will purchase or construct a set of condos or apartment blocks and permit investors to purchase them through the corporation, thereby, joining the faction. One investor can own multiple or a single unit but the company running the investment faction manages every unit. In return for management, the company takes a rent percentage. Investment group quality relies wholly on the company providing it. Theoretically, it is safe to invest in real estate, but factions are susceptible to similar charges that irk the mutual fund sector. Again, research plays a vital role in knowing how to invest in real estate.