Real Estate
Investing
Real estate investing remains one of the most popular
investment vehicles available to the average investor,
despite the fact that there are many other investments
receiving much more attention. Why is investing in real
estate so popular? Let's first look at why real estate
might be passed over by an investor.
There are many ways you can invest your money with little
or no involvement, but real estate is not one of them.
Real estate investing demands a large amount of time and
creates innumerable headaches. Dealing with tenants is
rarely easy, and even the most cautious real estate
investor is not immune to potential legal problems
associated with rental property.
In the long term, investing in real estate has
consistently shown growth in value, even when other
investments experienced periods of questionable stability.
As long as property values rise and you make timely
mortgage payments, your equity will steadily increase. The
best part about real estate is the fact that as long as
you have purchased your property right and maintained it,
your tenants will be making your payments for you! Each
month their rent money is used to pay the mortgage!
Real estate investing also offers some substantial tax
benefits not found in other investments. These tax
benefits vary according to the location where you live and
where your investments are located, but they can be quite
substantial. For more information regarding the tax
benefits to investors in your area, consult a tax or legal
professional.
What About the Short Term?
Investing in real estate is also a great investment in the
short term. Real estate lets even the average investor
maximize his or her investing power through leverage.
Using leverage, an average real estate investor can buy
properties in excess of one or two hundred thousand
dollars for only 5%-10% of the total cost of the property.
Say you buy a property worth $200,000 using a $10,000 down
payment. Over two years, the property increases in value
by $10,000. After two years your original investment has
doubled! See how often you can duplicate that feat
purchasing stocks or bonds.
The Best Way to Invest
Buying property and selling it within a relatively short
amount of time for a profit is the easiest way to make
money in real estate investing. By turning properties, an
investor avoids the hassles of dealing with tenants. Short
term investing also reduces the likelihood that the bottom
could drop out of the real estate market while you are
buying and holding a property. While you may not receive
the same tax benefits as you would in a long term
property, your return on investment, as a percentage, will
often be much higher.
Finding good real estate investing properties to "turn" is
not easy. If a property shows good profit potential, it's
unlikely you will be the only investor trying to close the
deal. In order to compete in today's real estate investing
market, you need to educate yourself. Either a real estate
investing course or a real estate investing seminar is a
great way to begin your real estate education.
