Advantages of Real Estate Investing

Generally, investing in real estate will yield above-average rates of return. Your real estate investment(s) will allow you to leverage (or borrow money based on your equity) to purchase other or more real estate. This leverage is what increases the momentum of "growing your investment". In addition to rental income (income from cash flow), you also gain equity from the appreciation of your property. You have a lot of control over your investment. There are many tax advantages to owning real estate.

Disadvantages of Real Estate Investing

It is expensive to get started in real estate investing. Real estate investing is not highly liquid ? your assets are not typically converted into cash very quickly. You need expert advice (e.g. consult a REALTOR®, investors, competent tax accountant, and attorneys). Real estate investing will require that you actively manage it. And, like all investments, there is a high degree of risk.

The Investment

Real estate investors hope to achieve various investment objectives. Their goals can be reached more effectively depending on the type of property and manner of ownership chosen. The most prevalent form of real estate investment is direct ownership. Individuals may own real estate directly and manage it for appreciation or cash flow (income). Property held for appreciation is expected to increase in value during the time it´s owned and then show a profit when it´s sold. Income property is just that: property held for current income (providing a monthly cash flow) as well as a potential profit at the time of sale.
The wisest initial investment for a person who wishes to buy and personally manage real estate may be the purchase of rental income property.

Cash Flow

The object of directing funds into income property is to generate spendable income, usually called cash flow. Cash flow is the total amount of money remaining after all expenditures have been paid. These expenses include taxes, operating costs (building maintenance, repairs, & utilities, etc), and mortgage payments.

Investment Opportunities

Although there are numerous types of investment opportunities, historically investors have found that well-located, one-family to four-family dwellings are favorable investments. Commercial real estate professionals rarely go after these small residential properties. Financing for up to four units is similar to single-family home financing. Tenants turnover is less in these units than in large apartment complexes. Small rental properties provide an affordable entrance into real estate investment.

For more information regarding real estate investment, please feel free to contact me directly.
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