Real estate investing is a great way to expand your wealth and to make long-term passive income. Many millionaires invest in real estate and credit real estate investing to their success.
For those willing to invest in real estate, there are endless opportunities to see high returns. While not entirely risk-free, those that invest in the right markets at the right time can see their investments rise in value and add to their wealth.
Have you ever thought of house flipping, renting, or wanting to tap into the real estate market for your gain? Read below to learn what you need to know before investing!
The Different Type Of Investments
Real estate investing is full of endless opportunities, and investments. Before you begin to invest, you need to have a clear understanding of your local market, and the most popular investments.
While there are many options for your first real estate investment, the most common type of investments are:
- Flips: This is generally for houses that are undervalued and sold for a lower price, that undergo renovations to sell for a higher value that earns more than the price and repair of the property. Flips cost more upfront than rentals. Flips see larger profits in a shorter amount of time, and you don’t have to manage a tenant or property after the flip is sold!
- Rentals: Rentals are a favorite among real estate investors, as the options are endless. You can rent long-term rentals such as houses, apartments, or even vacation rentals. Rentals can earn long-term passive income that can be used for other investments! Rentals cost less upfront after purchase and repairs, can earn more in a longer period, but require continued maintenance, and choosing the wrong tenants can cost you!
- Commercial Investments: Commercial real estate is a great opportunity for those looking to make large returns. Offices, Warehouses, and plazas are viable options for those looking to manage long term commercial clients and investments for the business.
Before you choose your type of investment make sure to do your research on what your local market needs, and what is required for each. You may find that rentals are easier for you to manage than a commercial investment, but it all depends on your investment type and goals!
How To Find Funding For Investments
Luckily, finding the funds for your real estate investment doesn’t have to be hard! Depending on your investments you can have a variety of options for your investment. Some investments may be easier to find than others, but with a solid investment plan, a business plan, and some capital, it can be easier than ever to get the funds you need to get started on your investments.
The Most Common Ways To Fund Real Estate Investments:
- Traditional Loans: Traditional loans may be a great option to fund your rental or flips. You can use either a home equity loan or a mortgage! Traditional loans offer low rates for the purchase of most residential properties, however, traditional loans will require a good credit score, and some equity to apply!
- Commercial Loans: The Perfect Loan for your commercial investment, these are usually offered by a bank. To fund large investments such as office buildings, you need to come prepared for this loan application. You will need a business plan, good credit, equity, and a cash flow projection!
- Hard Money Loans: Asset-based loans that are used for investment properties. These loans, which are sometimes called private money loans, offer fast funds and flexibility and are a favorite amongst house flippers and landlords for their flexibility and fast funds. This loan can be used for nearly any real estate investment.
Before you apply for any type of loan you should make sure you have a clear project of your ROI (return on interest) and make sure you have a clear understanding of the terms and requirements for the loans. Terms and Rates can vary depending on your property, and credit history.
How To Find Good Tenants
Rentals offer a lot of flexibility for If you choose a rental for your first investment, finding good tenants is a must. Many real estate investors have been burned by bad tenants, and eviction horror stories are something to be avoided at all costs!
Bad tenants waste your time, money, and can cause property damage, but good tenants will treat your property with care, be easy to work with and offer little to no problems!
If you want to find the best tenants for your property, you have to make sure your rental attracts the right tenants.
As a landlord, you should offer your rentals in good locations, with short commutes to business parks, and amenities. Your rental should be updated, clean, and properly maintained with a fair rent price. You can attract more potential tenants with a properly staged, and photographed rental as well!
Once you have tenants applications you should interview potential tenants, run background checks, and call references. Four your tenant interview, You can learn the questions to ask, and not ask, here.
After you find the perfect tenants you can start making money for your rental!
Summary
For any real estate investor, finding the perfect opportunity takes time and knowledge! While an investment may be the perfect fit on the outside, those without a solid plan for their investment may have trouble finding funding, tenants, or may not know where to look to find their next investment.
3 Things You Need To Know Before You Start Real Estate Investing Are:
- The Different Investment Types
- How to Find Funding
- How to Find Good Tenants
Have you invested in real estate?
About the Author: Catherine Way graduated from Michigan State University with her Bachelor of Advertising, with a specialization in Graphic Design. She is a content marketer for business, mortgage, and real estate industries. She has written real estate articles for Silver Doctors, The Paper Source, Active Rain, and Progressing Income. She enjoys finding new creative outlets through writing, designing, dancing, modeling, and more. She currently writes and reports for
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