Investing in real estate can be an extremely lucrative path to take in terms of building up your finances and professional portfolios. However, whenever we hear the term “investing” it’s easy to feel intimidated and overwhelmed by the whole process, but it doesn’t have to be so complicated. By using online resources and connecting with individuals in the industry, investing in property can be totally beneficial, and even fun.
First, it’s crucial to understand that investing in real estate is not cheap. Regardless of where you live and what the housing market is like, there are a lot of additional costs that go beyond just purchasing a piece of property. Basic household maintenance, taxes, general upkeep, utilities, etc. are all things that add up, so be sure that you have a solid financial plan set up before you go any further. If you need, take out a small loan that you know you’ll be able to pay off with the money you’ll either gain from the property, or from your regular job.
Now that you feel financially secure enough to invest, map out what type of property you want to put money into, and where you want it to be. Bringing in an expert would be helpful for this part of the process, especially if it’s an agent that you, or someone you’re close with, knows personally. Working with an expert will guarantee that you’re not overlooking any crucial details before signing your name on the dotted line.
Think about the property that would be most ideal for your lifestyle. Do you want a property completely separate from where you live in which you’re someone else’s landlord? Do you want a home, or would you prefer to start smaller and get an apartment? Is this project meant to be a more long-term renovation in which you flip the interior and re-sell for double the price? Whatever your dream investment looks like, keep your options open and consult an expert about what type of investment opportunity will be the most beneficial for you in the long run.
Once you check out a few properties and different areas for investment, it’s time to get more logistical. You need to make sure that throughout this process your rights as an investor are protected. Forbes Magazine recommends that before you invest in any type of property, you use an LLC, or limited liability company, to help you with “risk management.”
“The LLC has ownership over the properties; if anything should happen on those properties, you are not held personally responsible. Additionally, having an LLC can protect your funds should something occur on the property. It can also give ‘checkbook control,’ which can help if time is a factor when accessing your retirement funds for real estate-related purchases. This process allows you access to your funds whenever you need them,” (Forbes).
Once you work out the business side of your investment it’s time to work out all of the specific details and terms. This is where having a LLC and/or trusted real estate agent in your corner will be helpful. The terms for your personal investment are going to be specific for you and your wants with the property. Calculate rent payments, annual upkeep costs, and safety nets for your investment in case something comes up.
Deciding the terms will give you a greater insight into what your actual goals are when it comes to real estate investing. Do you want to actually be a landlord and make back your investment that way or are you more interested in seeing a personal vision come to life through the property itself? It truly is up to you, just make sure you have individuals that you trust in your corner to ensure that you’re making the best decisions for you and your money. Real estate is an expensive industry to invest money in, and depending on the current state of the market it can be a hit or miss. However, with some expertise, a small loan, and enough passion anything is possible in the realm of property management.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.