Real estate investing can be very risky, but it can also be highly lucrative. Yes, location, location, location is hugely important, but so who you are dealing with is even more important. The sad truth is that you will find that there are some very unscrupulous people who deal in real estate. Think of the people you see on late night television, who promise to make you a millionaire.
You should look at rental properties like stock markets. Most of us have a basic comprehension of the stock market and of the idea that you need to spend money to make money. However, with stocks, all we can do is hope that they increase in value. Similarly, retirement calculators work on a guess of when we will actually die. The problem is that if there is a mistake in this estimation and you actually live longer, your final years will be spent in poverty.
Next, you must make sure your investment isn’t too risky. Real estate is never risk-free, but some have much higher risks than others. Try not to choose private real estate funds, fixer uppers, real estate development and tenant-in-common options. Invest in these options and it is unlikely that you will ever see a return. Instead, choose to have titles that are totally yours, on properties that are interesting. These decisions should be made based on research and analysis, as well as due diligence. Try to find a property that you don’t have to manage intensively and that doesn’t take up too much of your time. Avoid short term rental properties like vacation homes or student accommodation, or properties in bad areas for instance. A better option is a property that someone with a good credit profile is likely to rent for a long period of time. Of course, this also means you have to know how to treat your tenants properly. It is impossible to never have a problem with your property, but so long as you deal with issues quickly, this shouldn’t be anything to really worry about.
You can also decide to look into a real estate investment trust (REIT). This means you need less investing capital up front, but the returns are not as high either. Through a REIT, you basically invest in real estate corporations. Hence, you could invest in anything from an apartment block to a retail park. You can find the value of a REIT on the stock exchange and NASDAQ. Basically, they are like mutual funds but focus solely on real estate. You do need to think about a few things before you invest in a REIT. First of all, look into what the economic conditions are of the areas of key holdings. Also, you should look into how the REIT has performed historically. Additionally, their future plans are very important. Find out who the manager is and what they history is. Last but not least, consider what the real estate market looks like and how this could affect how your REIT will perform.