What is Real Estate Investment?
Investing in real estate is a very risky business. However, there are certain investments that you can make that may not be as risky as investing in the original purchase of a property or land, but will still provide you with a return if done correctly and safely. These types of investments as identified by Fintalent’s real estate investment consultants can include flipping houses for profits, renting out your house or apartment to tenants on Airbnb, buying and selling stocks (stocks), purchasing commercial buildings on the market before they sell at fair market value (purchased undervalued properties), purchasing raw land to develop into residential properties with potential appreciation in the future (development and construction), buying distressed real estate with upside opportunity such as short sales or foreclosures.
These types of investments are all considered “cash flow investments.” Real estate investing is a business that involves finding undervalued real estate and making profitable deals, usually from the middle to the bottom of the market. While no one can guarantee that you will earn money on any investment, there are certainly strategies and methods that you can use to increase your potential returns, so long as you are willing to take the risk but willing to work hard and work smart at the same time.
There really is a lot of information on investing in real estate out there, so at first glance, applying it all becomes difficult. If you are brand new to the field, it’s important to first understand the main concepts of investing, so here is a short summary of them.
Real estate investing is just like any other business, in that it’s not a get rich quick scheme. At the end of the day, you have to put in your time and effort before money starts rolling into your bank account. There are plenty of opportunities out there for real estate investors that do not require you to invest your life savings into one property.
Real estate investment is only possible if you have an asset or asset-backed income in order to fund your spending and make profitiable deals on undervalued properties or land. It’s not enough to simply make a large amount of money to be able to invest in real estate and hope for the best. You will need a steady income, usually from another source than real estate, in order to pay for the property you wish to buy. This can be provided by stocks, bonds, or your job salary.
Real estate investing with no cash flow is a risky business and is not recommended, but it can be done if you have experience with credit repair and bankruptcy filing. It’s also important to note that using other people’s money (OPM) is a popular strategy among real estate investors. This involves borrowing money at a lower interest rate than your own interest rate, in order to make any investment of your own much more profitable. OPM can be used to fund your real estate investments, but remember that you need to pay back the borrowed money and interest before you have any profit.
Real estate investing can be done on all levels, from fix and flipping houses, to renting out and profiting from your house or apartment, to flipping commercial building for profit. However, the higher you go up in property value and potential returns, the more risk you take on with every deal. Most investors would prefer to invest in less expensive deals that earn them cash flow, than investing in a large property with a high dollar value of returns.
In order to determine the value of any real estate asset you are considering investing in, it’s important that you learn how to analyze the market and its trends. This will allow you to determine what currently makes a property valuable, so that if you ever make an investment on your own, you can determine whether or not it will actually be profitable or not. It’s common for real estate investors seeking return on their investments to purchase properties when they are undervalued by the market, at this point the investor can quickly make profit from the difference between their purchase price and true market value.
There are many types of real estate investments that you can make, but usually the most profitable for new investors will be flipping houses for profit. This is because it allows you to buy property at a cheap price and then sell it for a much higher price, there’s no secret to it, companies like HGTV are experts in house flipping and they help teach their viewers some of the best skills to look out for when making house flips profitable.
Real estate investors have one thing in common: they all have a plan before investing any money into the market. It’s important that you have your plan set and ready to go before you start putting any cash into real estate at all. This can be done by understanding your profit margins and how much you plan to invest at a time, how much you will earn per month, or year, and how much you plan to make in order for the investment to be profitable.
Real estate investing is a business that usually requires some experience because it’s hard work, but it can also be addictive if you like working on your own in order to make money. If this sounds like something that interests you, there are two main groups of people who participate in the real estate business: investors and realtors. Investors are people who buy properties and sell them themselves while realtors are professional investors and brokers who connect investors with the properties they want to buy and sell. The major advantage to be an investor is that you can buy the property and do all the work, you can even do everything yourself. In some ways, real estate investing feels like a game!
