Real Estate Investing - Introduction
Many people think someone is wealthy because that person owns a lot of things. The truth is, you can go broke owning things that don’t generate income. If you’re going to be both rich and poor, be poor first and rich later. Going from rich to poor is miserable!
A Real Estate Formula
The formula was really simple. The ads were always in the newspapers, I just didn’t see it. The ads were always the same: 1% payments of the purchase price, 5% down on a house purchase. For example, $100 000 home with $5000 down and $1000 per month payments.
Property Investing: Different Types
Property investment in itself is not an option. Within property investment you get various different types. Not one of these types can be defined as “the right option”. All of them can be used to generate income. The question just becomes: Which is the right option for you? Let’s look at some property investment types:
Real Estate Investment Options
Commercial real estate is a lovely place to begin because it's relatively secure when compared to a number of the other forms of real estate investing. The drawback with commercial real estate is that it requires a massive investment to begin with. This is something that lots of real estate investors do not even consider until they have built a sizable portfolio & have lots of funds to risk. It’s stable because most businesses that lease from you will need to lease on a long-term basis. This means that when you get clients, businesses prefer to stay in one location as long as possible because it’s bad for business in most cases to constantly be on the move, they tend to stay a while.
Investing Rental Property
There’s lots of ways in which a person can make a living when it comes to real estate investing some of them over more risks than others. It goes without saying that those that over the greatest risks are often the very real estate investment methods with the highest potential profit but slow and steady, in lots of cases, wins the race. Flipping houses is in the news a lot because so lots of fortunes have been made doing this ;more than a few have been lost in this venture as well but those don’t make the news as often.
Real Estate Investing - Leverage
Leverage is simply the power to control a large investment with a small amount of money. For example, you can leverage investments in the stock market. If you have $10,000 to invest, you can purchase up to $20,000 worth of stock. That’s a 50% margin, which is the most the government will allow.
Property Investing - Tax Benefits
Let’s take a look at the other huge advantage offered by real estate investing: tax benefits. There are four main benefits you can get from the government when you invest in real estate.
Risks of Real Estate Investing
All good things carry with them some degree of risk. The same holds true with real estate investing. Despite the promise of high rewards you should temper those ambitions with the reality that the risks involved are more often than not as high as the potential rewards. For this reason you need to take every possible precaution in order to insure that you minimize your exposure to risk whenever possible or at the very least are prepared, financially and mentally to accept the consequences of those risks if the time comes.