Real estate is a rock solid investment. You own a physical piece of property. It is not some digital asset or paper that promises to pay you something of value. Even in the worst of political or economic turmoil, you still own the same piece of physical property.
Normally, real estate works like this. You buy a piece of property or land. You lease it out to tenants. They live in or use your property. During their entire length of stay, they pay you a certain rent. You have a consistent and predictable stream of income.
There’s more to real estate you should know.
It isn’t all numbers
Real estate investment game isn’t played entirely over paper. Knowing acquisition costs, renovation costs and expected rental value isn’t everything. You need to work with real people. People can cause issues. Your realtor shouldn’t mess up. The contractor must keep it within budget. The tenant has to pay rent without fail. Basically, you need to be a people’s guy, if you want to get into real estate.
Understand how to take advantage of the tax system. Use real estate as your legal tax shelter. Always get depreciation deduction in ratio of property value and taxes. Learn about how mortgages work in combination to taxes. Talk with your accountants and auditors.
It’s a question of where and when
Properties that are not even a mile away from each other may have different values attached to it. You need to see what geographical advantage it holds. How easy the commuting options and other amenities are, should be factored in before picking real estate property. You need to get closer to where the new businesses are going, even if it costs a bit more. Expected rental value will be equally good.
Things might will fail
It’s not going to be all rosy when we talk real estate. Bad tenant, contractor, realtor, property manager or market situations can bog you down. You just have to roll up your sleeves and get to work the next day. Buy insurance and think of ways to offset possible losses.
How to get in
Real estate has a high barrier for entry. The costs involved are tall. Real estate isn’t cheap as other investments. Be aware of the many funding options, to be able to get to your entry point. Firstly, you can buy it like a boss, using your own cash in the bank. Secondly, you can use loan or debt to buy your property. Thirdly, you can invest into a portfolio of real estate investment rather than funding it entirely on your own. Simply put you need to have access to capital or create new ways.
Know the market
There will be asset cycles involved with real estate. Bullish market will see rise of property value. Bearish markets will see prices plummeting all the way down. It is usually preferred to buy top properties during times of recessions. Prices are pretty low and that’s time for you to tag the deal.