The fundamentals of real estate investments: all in one blog.
When starting a business in real estate, there are a few aspects about real estate investments that you must know about. These aspects are very important in order for a beginner real estate investor to know exactly what they’re stepping into.
First: The Types of Real Estate Investments
- Commercial real estate investing: As the name suggests, it means that you invest in commercial real estate property. This type of real estate investments is one of the best when it comes to accumulating wealth. It offers a steady cash flow, especially when renting it out.
- Residential real estate investing: The residential real estate is a property that is set for individuals or families to live in. Investing in residential real estate could be very lucrative if well planned and managed. Many real estate investors were able to make a fortune renting out property.
- Industrial real estate investing: Industrial real estate includes warehouses, manufacturing buildings as well as showrooms amongst other types. Just like the commercial real estate, it can be greatly rewarding in terms of finances. However, investing in such properties requires a great amount of knowledge and experience.
- Mixed-use real estate investing: Mixed-use property consists of residential units in addition to commercial space. One example is a single-family home with space for a clinic on the ground floor.
- Retail real estate investing: Retail real estate properties are simply ones that are used to sell goods to consumers. These include shopping malls and shops. The best feature of investing in the retail real estate is the high financial return and the long lease terms that allow for more steady cash flow.
- REITs: Real Estate Investment Trusts are companies that run real estate properties. Well, REITs are considered one of the best sources of passive income. Real estate investors tend to invest their money in them and receive the return on their share in the investment while engaging in another business or a full-time job.
Second: The Types of Property in Real Estate Investments
Investing in real estate is a great way to make money. The good news is the wide variety of property types that you get to invest in. For example, if you choose to invest in the residential real estate, then you have so many options. You can invest in single-family homes, multi-family homes or even studio apartments. However, if you choose to invest in the industrial real estate, then you get to invest in manufacturing property, warehouses, etc.
This variety is perfect for a beginner real estate investor who is on a tight budget. It allows him/her to choose as there are many affordable options that he/she can start with.
Third: The Types of Financing Strategies for Real Estate Investments
Funding real estate investments is as important as all the other factors. As there are many financing options, a house investor gets to choose what method to go with. For instance, financing a rental property could be through a conventional mortgage or even with an owner-occupied loan, while financing a fix-and-flip could be done through hard money lenders. Regardless of the financing strategy, make sure it suits your financial situation to avoid any financial binds in the future.
Check out our blog for more on the myriad of investment property financing strategies.
Fourth: The Types of Real Estate Investment Strategies
With the variety of real estate investment strategies available, a real estate investor can choose how to start investing in real estate. As a beginner real estate investor, you can choose to go with low-risk investments in the beginning. These low-risk investments include the rental strategies whether they are long-term or short-term rentals.
Moreover, as you begin to gain more experience in real estate investments, you could choose to work on a more advanced level. You could upgrade your investment level to start investing in fix-and-flips, for instance. So here is a list of the real estate investment strategies:
- Buy and holds: This investment strategy might be one of the safest ones in the business. By buying an investment property and holding it for as long as you wish while it is appreciating, you have a chance of making as much as double the value by the time you sell it.
- Rental strategies: When it comes to becoming a house investor, you get to choose whether to go with traditional renting or Airbnb renting. The difference in both strategies is the lease term. In traditional rentals, you rent your property for longer periods of time. While in Airbnb rentals, you are working with a type of renting mostly for vacations which lasts for a month at most. All in all, the sole purpose of such investment strategies is making money in real estate on a steady basis.
- Other real estate investments: Other investments include flipping houses and wholesaling real estate. These strategies are great in terms of financial rewards. However, they are a bit too risky for beginner investors. Therefore, we recommend that you start with investments that come with lower risk rates and gradually grow from there.
Fifth: The Analytics Tools Used for Real Estate Investments
Real estate investments are nearly impossible without analytics. Therefore, using the right tools is essential for accurate results. One of the most effective tools is the rental property calculator. With this tool, real estate analytics have become much easier. As a real estate investor, calculating the cap rate and the cash on cash return is important. That is especially before buying an investment property. These measures indicate the potential of real estate investments. With the help of the rental property calculator, you will be able to conduct investment property analysis as well as a real estate market analysis. The importance of such analysis shows up when deciding on the real estate markets to invest in as well as finding profitable properties.
Our blog “Every Real Estate Investor Needs These Real Estate Analytics Tools” is the perfect guide to real estate tools for analytics purposes.
Finally: The Real Estate Investing Tips for Success
A successful real estate business requires that you:
- Keep expanding your knowledge: Of course, getting started in real estate investing requires proper education. However, even after you start, make sure you keep expanding your knowledge by attending events and courses held by real estate experts. Know that, in real estate, the more you know, the easier it is to plan. Not only easier but also wiser. The more you know, the more you’ll be able to identify your mistakes and learn from them.
- Acquire connections: Becoming a real estate investor is all about connections and networking. Having experts on your contacts list can save you so much time and effort and maybe financial resources in real estate investments. Moreover, creating connections is strongly relevant to your reputation as a real estate investor. The thing that you cannot afford to lose is, actually, your reputation.
- Learn to negotiate deals: The most successful real estate investors are great negotiators. Trading real estate investments requires the ability to negotiate them. However, in order for you to be able to negotiate, you must be confident and know exactly what you want.
- Surround yourself with experts: Hanging out with other house investors and successful people in the arena is very helpful. We can’t stress enough how much you’ll be able to learn from them. Moreover, make sure they are like-minded people. The last thing you want is people discouraging you. On the contrary, you want people who are willing to support and teach you.
To learn more about all aspects of real estate investing, continue reading our blog.