A Guide To Becoming a Successful Real Estate Investor
People see it everywhere – get rich quick schemes that promise money and good fortune. In reality, real estate is a complicated investment field that requires abundant financial resources. Real estate is a great way to expand one’s investment portfolio.
This guide will help potential investors understand the steps involved in becoming a real estate investor.
- Learn – Understanding the market is an essential component of becoming a successful real estate investor. It’s important that investors analyze their finances and goals to determine what level of risk is appropriate. There are two main types of real estate interests. Ownership interest involves taking responsibility and control of the land, while leasehold interest gives tenants rights in exchange for rent payments.
- Risk – Real estate features two types – private and public. Private real estate gives investors direct ownership interest in properties. This allows owners to operate properties and earn private incomes. Public real estate generally involves purchasing shares from companies that focus on publically traded real estate equities. This often includes investment trusts. Investors are simply paid dividends based on rent payments and investors are shareholders, not individual owners that are responsible for land maintenance.
- Equity and Debt – When investing in debt, hard money loans are given to property investors. This allows loan investors to earn profits from interest payments on personal mortgages. Equity investments combine ownership and operation of the land, meaning the investor has full responsibility for the entire property investment.
- Investment Sector – Private equity generally includes purchasing commercial or residential properties where the investor acts as the landlord. Public equity involves investment trusts that often include mortgage securities.
- Trading – Real estate flipping means an investor’s goal is to purchase a property and then be able to turn around and resell it for a profit. These types of investors often hold onto properties for only a few months and avoid time-consuming property improvements.
- Finances – Investments should be well rounded. Real estate investments should be considered a portfolio investment, meaning that they compliment bonds and stocks and ultimately add stability to incomes.
- Evaluate – Purchasing real estate is not inexpensive and investors should analyze their assets.
- Risks – Flipping properties are not without risk. In fact, investors need to take into consideration that while properties are on the market, it’s simply money out of their pockets.
- Plan – For people that decide real estate investing is something they want to pursue, they need to learn to rely on others, such as professional money managers, property managers, real estate agents, real estate lawyers, home inspectors, insurance brokers and even mortgage brokers.
As with any form of investing, real estate is not without risk.
Better Than Loans caters to real estate investors, offering a variety of hard money loans, including bridge loans, apartment building loans and commercial building loans.