A Beginners Guide in Real Estate

Investing in Real Estate

Real estate has been a popular investment for various investors due to its rewarding benefits. This because the goal is to put your money to work by investing it in a property and be able to reap profit in the future. However, it’s not an easy road as there are many risks as well as costs you need to pay.

These include water, upkeep, utilities, and many more. Also, Always keep in mind that the income or return you make in your investment must be able to cover the taxes you pay and the risk you may encounter.

Investing in real estate is pretty simple once you understand the basics factors of investments, how it profits and the risk you’re willing to take. In short, you’ll need to purchase a property to start investing, avoid bankruptcy, earn income thru renting, and then use some of the money you’ve earned to purchase more properties.

Simple as it may seem, it still requires a lot of understanding especially for those who are just new to investing in real estate. Below is a simple guide to give you an idea of real estate investments. 

Ways To Make Money in Real Estate Investment

There are four ways you can make money when you invest in real estate. These includes:

1. Cash Flow Income

Cash flow income focuses on purchasing a real estate property such as an apartment building and then make it available for rental.  The income you earn from collecting rent will provide you a steady stream of cash flow hence allow you to have a stable profit monthly.

BTW, if you are interested in topics like this, check out this article.

Cash flow income can also be applied to other types of rental such as an office or retail buildings, storage warehouses, and rental houses.

2. Real Estate Appreciation

Real estate appreciation allows you to earn money through a change in the market value of a property. For instance, you purchase a property for a low price. You then renovate and model it and sell it at a higher market value to potential buyers. It can also be sold when the location is perfect for business due to it being crowded and busy.

Whatever way it is, once you sold that piece of property, you double or triple the money that you initially started with. However, this is a very tricky method due to the huge risk involve once you purchase a property. 

3. Real Estate-Related Income

Real Estate-Related Income is often used by specialists in the real estate industry. They earn money from commissions on their client’s properties that they helped purchased or sold to other people. Some real estate companies offer a portion of the rental income they earn in exchange for the management of the day-to-day operations of their rental properties. 

4. Ancillary Real Estate Investment Income

This type of income can reap great earnings for most people. Ancillary Real Estate Investment Income allows you to earn money from the small business inside your properties. These include vending machines, laundry rooms, rental apartments, and many more.

This means it’s a mini-business within a larger real estate investment hence allows you to earn an income by collecting profit from them.

Beginner Tips for Investing on Your First Property

There are some ways for you to purchase a property for your investment. One of these is by purchasing a property through having a mortgage out against a property. By using leverage, you can attract various real estate investors as it allows them to acquire or have a property that their income otherwise can’t afford to buy.  

In order to protect yourself and haves less amount of risk to take, you can consider holding real estate investments by using special types of legal entities such as limited liability companies or limited partnerships instead of using your own name.  Also, try to ask for legal advice on what method will suit you best. 

So, once an investment goes downhill wherein it will result in lawsuits and loss, you will have these legal professionals to protect you and your assets. The worst-case scenario would only be losing the money that you initially invested. As a result, you don’t have to worry about losing your retirement accounts and other assets you invested.