Real estate investing for beginners: What you don’t know about buying investment property.
Despite the many ways an investor can make money nowadays, there is no way a person can guarantee stability and profit 100%. However, this does not mean that there aren’t safe investments through which you can grow your money.
Related: Low Risk Investments: How to Lower the Risk of Your Real Estate Investment
Real estate, as a business, might be very controversial. Some will tell you not to invest in it while others might say it is the best way to secure your future. In our opinion, real estate is a very lucrative business. As a matter of fact, it is one of the best investments you can make to secure financial independence as well as your retirement years. Don’t believe us? Continue reading and by the end of this article, we bet you’ll jump right into buying investment property!
#1. Buying investment property is a piece of cake
First of all, yes buying investment property is very easy on two levels: education and process. Investing in real estate does not require much of you in terms of education. Truth be said, many successful real estate investors dropped out of school or started during college years. Not only that but also many were able to repay their student loans through real estate investing. The only thing you will need is access to information as well as real estate investment advice.
By the way, Mashvisor is just the right place to get that, so go ahead and sign up to book a session with our real estate experts!
When investing in real estate, you also won’t need much to learn how to buy investment property. The process starts with research and ends with the deal closing. However, the only part where you would have to put some extra effort is with the investment property analysis and the real estate market analysis. These types of analyses are the ones that will help you spot the best real estate investments. You might also be able to find properties below market value, thus, saving money on property expenses and increasing your equity at the same time. But how do you make the calculation process easier? With the help of the investment property calculator, of course!
The investment property calculator
With the advancement of real estate investment tools, you have no excuse not to find profitable deals. The investment property calculator provides the real estate analytics that can help you avoid any properties that can negatively affect your investment portfolio. Moreover, all it requires is that you provide investment property information such as price, mortgage, expenses and a few other numbers and leave the rest for this amazing tool to come up with.
To learn more about our investment property calculator, click here.
#2. Buying investment property is easy to finance
Financing is typically the major challenge for many investors. However, unlike other investments, real estate is the easiest to finance. Let’s take stock investments for example. If you wish to invest in $100,000 worth of stocks, you must have that amount of money. Now, if all you have is $25,000, then the hardest part would be to find a lender who is willing to finance your stock investment. Actually, it would be a matter of good luck if you find any.
On the other hand, real estate is easier to finance. There are actually so many investment property financing methods for you to choose from. Moreover, you can actually buy a $100,000 property with the $25,000 you have since mortgage lenders will require that you only put 20% as a down payment.
Related: What Are Your Options for Financing Rental Properties?
#3. Buying investment property is a predictable business
As we have said before, the investment property calculator will help you predict whether the property is profitable. But, what if we tell you that this tool will also help you 1) Keep up with the investment property’s performance and 2) Predict its performance a year ahead?
Yes, that is true. By calculating your rental income and deducting the expenses, you will come up with what we call cash flow. The cash flow is a very important metric that will help you with the rest of the metrics such as the capitalization rate, the cash on cash return and the appreciation rate. This way, you can make sure you are buying investment property that is profitable all the way through.
#4. Buying investment property is recession-proof
Being recession-proof is perhaps the best quality of buying investment property. The reason behind that is that property investments always meet the most basic need of people: housing. We doubt there is a person who wouldn’t want a roof over their head. In other words, the rental demand is not going anywhere as long as you pick the right location!
#5. Buying investment property offers guarantees
In real estate, if you have $100,000, you can actually buy four rental properties worth $100,000 each. The mortgage lender will finance the rest for you. This way, you have four properties worth $400,000 while you’ve only invested $100,000. Now, any increase in value is yours, of course. Also, as long as you manage to rent your rental properties, these properties will pay for themselves with the rent they produce. All in all, you are better off investing in real estate than other types of investments such as stocks.
#6. Buying investment property means tax advantages
Real estate investors find real estate the easiest way to accumulate wealth due to the many financial advantages associated with the business. The major advantage would be tax deductions. Property investing is subject to all kinds of tax benefits starting from travel expenses all the way to mortgage payments and expenses.
Related: Investment Property Tax Deductions When Buying or Selling Real Estate as an Investor
#7. Buying investment property means you are in control
We all want a business that we can control and real estate is what you need at this point. First of all, you are your own boss and in charge of all aspects of the business. Second, even if you choose to hire property management services, you’ll be the one in charge as you receive performance reports from your manager.
Also, you can always decide what to do with the property. You can sell it when you think the time is right. You can also apply improvements whenever you feel it is necessary. Besides that, you get to decide when to raise the rent.
When it comes to buying investment property, it is a matter of getting access to the right resources. So, we encourage you to check out Mashvisor’s blog and learn all about the business in no time!