Real estate investing involves buying, holding, managing, renting, and/or selling real estate property for profit. Unlike many other investments, real estate investing is not usually viewed as a sure-fire guaranteed way to make money.
It takes a great deal of skill and research to gain a profit from real estate. Generally, the development of real estate as a part of an overall real estate investment plan. It is considered as a specialty of real estate investing known as real estate flipping. Flipping real estate involves purchasing property, improving it and then selling it quickly for a profit.
Here are the Types of Real Estate Investment You Can Make
There are several types of real estate investments you can make, including cash flow investment properties, foreclosure investment properties, residential real estate investments and commercial real estate investments. Cash flow investment properties include single-family houses, condominiums, townhomes, row homes, mobile homes and duplexes.
Foreclosure Investment Properties
Foreclosure investment properties involve selling a home after the mortgage period has expired. This type of real estate investing can earn high returns, but the risks are significant. Most investors who flip foreclosure or bankruptcy real estate investments do so with no money down.
Another type of real estate investing is house hacking. House hacks refer to purchasing real estate without going through the traditional purchasing process. For example, an investor who buys a foreclosed single-family house can flip the house by making minimal improvements and selling it. In some cases, a house hacker will even flip the house without ever moving into it. Most investors who take house hacking seriously take on the risk of house hacking to increase their profit margin.
Franchise and Investment Properties
Commercial real estate investing deals mainly with franchises and investment properties. These deals usually tie up the owner of a chain of restaurants, movie theatres, etc., with a chain of apartment buildings, shopping centers or hotels.
Investors interested in commercial real estate investing can make a killing by buying up franchise properties and tying them up with chain companies. The more outlets the operator shares, the greater his profit margin will be.
Buying Real Estate Via Mutual Fund
Buying real estate investments via a mutual fund is a smart way for new investors to enter the market. Mutual funds contain many different investments that are all closely held by investors who have the same common goal i.e., to make a profit by capitalizing on trends.
Most investors have at least one mutual fund, so if you want to invest in real estate investments, you have an excellent chance of finding a good investment opportunity in your area. Mutual funds are used for several different purposes, including diversification and retirement planning.
Because professionals manage them, they are much safer than investing directly in a single stock or property. For many investors, this level of safety is worth the time and effort it takes to learn new investment strategies.
Some Tips to Have a Good Start in Real Estate Investing
There are plenty of ways to make money from the real estate market. New investors should not be afraid of taking the initiative and putting themselves in the driver’s seat. Many experienced investors have assembled impressive portfolios just by investing themselves initially.
There is certainly no shortage of opportunities for new investors to make money if they follow a few simple rules. By becoming educated about real estate investing, finding good real estate investment opportunities and knowing which methods are best for their situation, new investors can control their financial future and put their dreams into action.
Work With a Mentor
One of the best ways for new investors to get started is to work with a mentor. A professional investor with years of experience can offer valuable insight into which methods work and which don’t. They can also help investors focus on areas where they need a higher level of leverage.
Leverage is a term that describes how much money an investor can gain on a successful transaction without borrowing additional funds. Higher leverage levels allow investors to purchase more property or real estate development properties without relying on outside financing.
One of the best things about working with a professional investor is that they can help investors evaluate the real estate market. A novice investor may not have the expertise necessary to determine whether a particular piece of property is worth investing in or if it would be better to pursue other options.