Real estate investing isn’t for everyone, but it’s far more realistic than most people think. If you’ve never spent much time researching the opportunities in this area, now would be a perfect time.
The “Why” Behind Real Estate Investing
People from all walks of life talk about the idea of investing in real estate from time to time. While it’s more feasible when you have lots of money at your disposal, middle-class individuals aren’t precluded from dipping their toes into the water. This makes it a unique form of investment with a multitude of benefits, including:
- Flexibility. The beauty of real estate investing is that you have the flexibility to do it when you want, where you want, and how you want. There’s residential, commercial, and industrial real estate – to name a few niches – and everywhere you go, there’s more real estate! It’s a business that you can run from home, as a full-time endeavor, or as a side hustle. It’s what you want it to be.
- Income. The income earning potential is unlimited with real estate. If you’re only interested in making a few hundred dollars a month off of a relatively hands-off rental property, that’s your call. But if you eventually want to make hundreds of thousands of dollars on larger investments, you can gradually move in that direction.
- Stable investment. When you study the historical return of the stock market, the average rate of return is roughly 7 percent per year (when adjusted for inflation). Real estate produces a very similar rate of return – though it’s far more stable in the long haul. (Real estate is a “real” commodity, whereas stocks are not.)
4 Tips for Getting Started
Real estate investing isn’t for everyone, but it’s certainly highly attractive and rewarding. If you’re looking to get started, here are some tips you may find helpful:
- Set Goals
Any investment strategy must begin with a clear set of goals and objectives. In particular, ask yourself two questions:
- What do I want to gain from real estate investing?
- How do I want to realize these gains?
One person might want to earn an extra $1,000 per month by owning residential rental properties. Another person may be interested in earning $15,000 per month via commercial investments. Both situations are starkly different and require unique approaches.
- Protect Yourself
Real estate investing is anything but a casual endeavor. Financially and legally speaking, there are some massive stakes. It’s imperative that you protect yourself by developing a business structure – like a Series LLC.
“Series LLCs are ideal for real estate investors. A series LLC gives you all the same benefits as a regular LLC, but it serves as a sort of ‘umbrella company’ with additional flexibility and protections for multiple companies or lines of business within your overall operation,” IncFile explains. “For instance, a series LLC can give rental property owners a way to separate their real estate investments from one another.”
- Understand the Strategies
Depending on the goals you’ve outlined for yourself, the market you live in, and what skills, experiences, and expectations you possess, you’ll be able to choose from a number of different investment strategies. Learn about techniques like rental investments, multi-family, flipping, live-in flips, etc. Which one speaks to you?
- Get Help
Don’t do real estate investing on your own. Make sure you have people around you who have some experience. Find a mentor and soak up every bit of knowledge they throw your way. Knowledge is power in this industry.
Take a (Calculated) Leap of Faith
When you finally decide that you’re ready to get into real estate investing, it’ll feel like you’re jumping into the deep end of the pool for the first time – but it’s worth it. Real estate is one of the primary driving factors in wealth building and it’s not something you can afford to ignore any longer. Do your research and due diligence. But at the end of the day, don’t be afraid to take a leap of faith!