Learning The Business Of Investing In Real Estate

A picture of a house for sell by owner

Cities are growing bigger with each passing day. According to a recent survey by GoBankingRates, cities are growing at an amazing rate. Atlanta and Georgia grew 24.54%, whereas the growth rate of New York and Buffalo, was up to 34.6% last year.

This indicates a boom in the real estate business. This business is evergreen, and lucrative. And you don’t need to have a lot of money to start investing. Read on, to learn more about investing your money in real estate.

A picture of the words invest in real estate, with a house sitting on top of some money

What is Real Estate Investment?

It’s the investment related to the real estate business. It involves purchasing, selling, renting, and management of the property. Real estate, is a property that consists of a land that contains buildings, or natural resources. Resources such as crops, water, or minerals.

A house frame starting to be built from the ground up

How did it start?

The real estate investing business has been around since the ancient times. According to some historians, it even existed in the caveman era. In the middle ages, the development and marketing of the real estate, was a super popular business.

This established industry was brought to the United States, by the European colonists. The vast opportunities of the New World, and heavy influx of people, made this business very popular, and profitable. Throughout the 19th and early 20th century, it remained a hot business, due to population explosion.

On Sep 14, 1960, President Eisenhower issued a Federal Real Estate Investment Trust (REIT), that contained both the attributes of stock-based investment, as well as the real estate. This act enabled investors to pool resources for real estate projects.

Over the years, this legislation has been modified several times for much bigger real estate industries. Since then, the real estate investing has been a profitable business, providing great opportunities for those who pursue investing in real estate property.

Where to start investing in order to be successful?

A real estate business is basically all profitable. Some of its types will pay you less, while others will pay more. The amount of profit you earn, depends on the money you are ready and willing to invest. Some of the most profitable types of real estate businesses are as followed:

Commercial Real Estate

Commercial real estate includes office, retail, industrial, and parking spaces.  This is one of the most profitable types, amongst all the other real estate businesses. It pays very well in return. But the prices of the business space, comes at a high price.

One of the good things about commercial real estate, is that the property is rented to a business, rather than to an individual. It minimizes the risk of dealing with the defaulters, because companies tend to pay on time for having a good reputation around. So do invest in commercial real estate, should you ever come across this opportunity.

Residential Rental Properties

This type of real estate business is considered very safe. You’ll enjoy ownership of the property, and receive monthly payments from the tenants. However, the maintenance of the property will be upon you. You’ll also have to deal with people who might delay their payments, or refuse to pay for property they’ve damaged. Finding tenants also may not come as easy.

However in any case, if you decide to sell your property, you’ll surely get profit form it. Real estate properties tend to increase in values by the year. Therefore, if you find a good deal in an area experiencing good growth potential, make an investment. It could pay you handsomely after some time.

a real life picture of a foreclosed home

Fixer-Uppers

This type of real estate business involves the buying of property, that’s normally in bad condition, at a relatively cheap price. You then resell it for a higher profit, after its been fully renovated. This is especially good for you, if you are looking to make money fast. However you would have to be careful, while estimating your renovation cost.

You may end up spending more money on buying, and fixing the property up, verses what you would be actually receiving from reselling it. Therefore you’ll have to obtain knowledge about this business, which is not very difficult to obtain at all. You can read a few blogs or books, and learn all about fixer-upper businesses. Learning and applying this knowledge, could earn you a handsome profit in a relatively short period of time.

However, if your working with a small amount of funds or experience, and your unable to spend a large sum of money, their is a way to make a small invest in real estate. Here are a few routs you could take, where you won’t need a lot of money or experience, to be successful with real estate:

House Hack

In house hacking, you rent one portion of your house, while living in the other. The tenant lives right under your nose. With these cases most of the time, it doesn’t get messy. You’ll also get the benefit of FHA loan, which requires only 3.5% down payment.

REITs

REIT’s or Real Estate Investing Trusts, are the companies that are being publicly traded thru various exchanges. It owns, operates, and finances income-producing real estate. It is like a virtual property, for those who don’t want to buy real properties. The rates of RIETs differ, according to it’s value.

However, most of the major mutual fund companies offer a REIT that starts in the price range of $500-$2500. This is really good for people who are looking to invest a small amounts of money in a real estate business.

A cartoon picture of a scale weighing a bag of money to the left, and a house to the right.

The Ups and Downs of Investing in Real Estate

Investing in real estate is a profitable business. But like all other things in life, it also has certain ups and downs. Here are some issues that you would have to deal with in the real estate business.

Natural Calamities

Natural calamities can damage your property at any time. Most of the damages to properties are caused by floods, which are occurring more frequent, with each passing year. Not only that, but your property may also have to endor thunder storms, earthquakes, and/or tornados.

Unexpected Issues

You may also have to deal with some unexpected issues. Issues like disputes with the management, or problems with the contractors. It takes a lot of effort and money to find reliable staff for your business.

a cartoon picture of an angry male customer in a dress shirt with a tie

Difficult Clients

Sometimes, the clients may give you a really tough time. They can delay payments, or refuse to pay for damages. Some clients tend to cause trouble to any, and everyone they find near them.

Loan Problems

For investing in real estate, you may need to get loans. For that purpose, you will have to find a reliable source that can lend you money on nicer terms, when you need it.

My Conclusion For Investing In Real Estate:

These were some ups and downs of investing in the real estate, which in fact, exist in almost every business. However, it does not mean that you should not invest in real estate. It has proved to be one of the most profitable businesses, especially in the last few years.

So, if you are looking to start you own business, real estate can be a really good choice for you. You can do this business even if you have a very little money to start with.

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But other than that, would you happen to have something to say about investing in Real Estate? Maybe something to add to what I’ve already mentioned? If you do, please feel free to leave me a comment below. I would love to know what’s on your mind! Thanks for checking out my post, and good luck with your success!

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