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Real estate investing is like a big game of Monopoly, except instead of plastic hotels and paper money, you’re dealing with real properties and actual cash. It’s all about buying low, selling high, and making smart choices along the way.
Think of it like this: you’re the boss of your own little real estate empire. You get to choose which properties to buy, how to improve them, and when to sell them for a profit. But it’s not just about buying any old property – you need to do your homework and make sure you’re investing in the right place at the right time. Location is everything in real estate, and you need to know what areas are hot and which ones are not.
Sure, there are risks involved – just like any game of Monopoly, you can go bankrupt if you’re not careful. But if you do your due diligence and make smart choices, real estate investing can be a lucrative and exciting way to build your wealth. So roll the dice and take a chance – who knows, you might just end up owning Park Place and Boardwalk someday!
What are the different types of Real Estate investments?
Residential is the most common real estate investment and includes any property used for residential purposes. Included in residential real estate are single-family homes, condos, townhomes, duplexes, etc. A standard tool that residential investors use is the BRRRR method, which stands for buy, rehab, rent, refinance, repeat. Every investor has their ideas and interpretation of the BRRRR method. Don’t worry; there will be a blog coming that focuses on the BRRRR method!
Commercial real estate (CRE) properties can be leased or rented for business purposes, most commonly office spaces. For example, a small accounting firm renting office space to conduct business operations.
Retail real estate consists of businesses and establishments that rely primarily on foot traffic and are in place for shopping and entertainment purposes. For example, a shopping mall is considered retail real estate.
Industrial real estate includes all buildings and land used for industrial operations. Industries that would utilize industrial real estate would be manufacturing, processing, warehousing, research, distribution, etc. Think of industrial real estate as businesses involved in getting products to the end-user or retail locations.
Land real estate involves owning a plot of land and leasing it to a second or third party. For example, individuals who own land may choose to lease or rent it to farmers in a second- or third-party agreement.
Wholesaling real estate is the process of getting land or property (residential, commercial, or retail) under contract, finding a buyer, and contracting the land or property to the buyer at a higher price. Wholesaling is most commonly used by investors with minimal start-up capital and a vast network to pull from.
Real Estate Investment Trusts (REITs) are the stocks of real estate. Nareit puts it best, “REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.” REITs can be spread across many different real estate types, or they may choose to specialize in one sector. Regardless, REITs are beneficial to investors who want a hands-off experience but looking to diversify their portfolio and seek capital gain.
How can I finance my real estate investment?
So, you want to jump into the exciting world of real estate investing, but how can you finance your investment? Well, you could try robbing a bank, but that’s probably not the best idea. Instead, there are a few more legitimate options.
(1) One option is to apply for a traditional mortgage, which involves making a down payment and repaying the loan with interest over time. Traditional mortgages come from banks and financial institutions.
(2) Another option is to look for alternative financing options, such as hard money loans or private money loans, or pooling resources with other investors.
(3) Use your own savings or line of credit to finance the purchase of the property.
It’s important to do your research and work with professionals like real estate agents, mortgage brokers, and financial advisors to determine the best financing option for your investment goals and financial situation.
Real estate investing is the only time it’s acceptable for you to have a mortgage on multiple properties
It’s possible to have a mortgage on multiple properties for rentals. However, obtaining multiple mortgages can be more challenging than getting a mortgage for a primary residence because lenders typically require a higher down payment for investment properties and may have stricter credit score and income requirements. It’s important to carefully consider the risks and benefits of taking on multiple mortgages before making any investment decisions, and to consult with a mortgage broker for professional guidance.
How can a mortgage broker help you with real estate investing?
Well, let me tell you, working with a mortgage broker can be a real game-changer when it comes to real estate investing. These folks have the inside scoop on all the different mortgage options available to you, and can help you navigate the sometimes confusing process of securing financing for your investment property. They can also help you get pre-approved for a mortgage, which can give you an edge in a competitive market. And let’s face it, when you’re dealing with a lot of paperwork and legal jargon, having someone in your corner who knows the ropes can be a real lifesaver. So if you’re thinking about investing in real estate, consider working with a mortgage broker – they might just be the secret weapon you need to succeed.
Real estate investing is like a rollercoaster ride, with its ups and downs, but if done right, it can be the ride of your life. It’s like a game of chess, where you need to plan your moves ahead and anticipate the risks and rewards. Investing in real estate requires a mix of patience, persistence, and smart decision-making.
Contact us today to start planning your real estate investment journey!