Author: Jarod Bona
Our first blog post at Titles and Deeds will examine why you might want to invest in real estate in the first place. Our website is focused on real-estate investors, so it makes sense for us to articulate why we believe real-estate investing is a good idea.
This article will focus more on beginning or basic investing as readers that are already flipping shopping malls or buying and reconstructing large apartment buildings already know why they should invest in real estate.
Before delving into some of the advantages, however, we will be very lawyer-like here and explain that real-estate investing isn’t always successful. It doesn’t always work like you see it on television. You might lose money. In fact, if you are in the game long enough, there is a good chance you will lose money on one or more projects. And real estate isn’t necessarily easy money in the first place.
You might eventually find yourself sipping margaritas on the beach thinking about all the passive income flooding into your checking account as you watch one wave after another splash into the sand. But it will take some smarts and hard work to get there. You will have to supply the hard work, but with this blog we will help to facilitate some of the smarts.
Real-estate Investing Presents Many Options
If you don’t like flipping houses, you can buy and hold apartment buildings, or develop commercial properties, or buy tax liens, or lend private money, or lease vacation-rental properties, or participate in any number of different types of investments.
You might pick one type of investment, learn everything about it, and specialize. Or you could bounce around, depending upon the state of the market and the economy—there is an optimal strategy for every market. Or, more likely, you start with one type of real-estate investment and move on to another as you gain experience. For example, some investors start with a flip to gain cash, then purchase multi-family or apartment buildings for long-term wealth.
Real-estate Investing Offers Unique Financial Benefits
The most obvious financial benefit of real-estate investing is leverage. Leverage is the use of borrowed capital (or some other instrument) to increase the returns of your investment. Using leverage is particularly common for real-estate investments, as most purchases incorporate some type of debt financing.
When it works, the financial benefits of real-estate investing are fantastic. You can often purchase a properly by putting down thirty-percent or less of your own cash. If you have renters in your property and you have invested wisely, the renters will effectively pay your mortgage interest, insurance, and taxes, along with some of the loan’s principal, and leave some cash left over for you or your business.