Real estate investing is not as complex as it sounds but it does have its own rules and dynamics otherwise it can cause a great deal of your liquid cash to go down the drain. Land or real estate basically means buildings of any sort such as houses or warehouses etc and anything attached to those establishments such as grounds or sheds and so on. Real estate investing can take place in many forms be it industrial, commercial or residential and it all depends on the purpose you have in mind.
I caught up with the Breia Real Estate Investors Ryan Kuhlman, who shed some further light on the scenario and helped out with this article.
As far as investment vehicles go, real estate is the most common way that people use their money to obtain a profit or secure a higher financial return in the future. This has become more common in the last few decades and many people have made a lot of money by being able to understand the dynamics of the real estate market successfully.
Basic rental properties are bought for the simple purpose of renting them out so that a running income can be created. The purpose for which they are rented depends on the specification of the property itself and what type it is registered as. If it is an apartment then it can only be used for residential renting and so on. Larger pieces of real estate give larger returns such as warehouses for example.
Of course for the rent plan to work you need your real estate to be in an area where people are looking to rent and where you are likely to get good rates. Finding a tenant that is trustworthy and will pay on time along with looking after the property is very important. If you have not purchased the property in its entirety and are paying mortgage payments, the rent will have to be high enough to accommodate these payments along with yielding a good amount of profit.
Real estate investment groups are today’s ideal situation when it comes to investing as you buy shares with the firm and the firm itself maintains the property or the living space you co-own for a small fee. This enables you to spend the least amount of time in managing the property. Also since the investment firm personally looks into all the properties, you are minimizing your risk at the same time.
You get a lot of leverage when you invest in real estate and this you would not have if you were buying stock for example. In most cases you only need to pay 25% down payment and depending on the location you may even need to pay as less as 5%. This gives you all the time in the world to pay the installments and side by side generate a sizeable income from the property by renting it or using it for some small business venture (this depends on the nature of the property).
For people who have made real estate their profession, there are endless possibilities as they usually own nothing but enable lots of real estate transactions. If they do own something they can sell it at a profit or make a business of buying and selling properties.