The Nuts & Bolts of Real Estate Investing

The Nuts & Bolts of Real Estate Investing

Literally anyone can become a real estate investment guru. Do you want to know the how? Here are some of ‘The Nuts & Bolts of Real Estate Investing’ that can be capitalised on to build an investing business?

Main types of investment (The Bolts)

There are mainly three types of real estate investments that investors can focus on exploiting:

Land

Land in this context refers to any piece of property in its raw and natural state. This is prior to any construction, modifications, or improvements, such as sewers, streets, and lighting.

Investing in land can certainly have it’s financial rewards, but it comes with certain setbacks:

  • It takes quite a bit of time to actually realise any profit as you most likely will not generate income during the hold time.
  • The knowledge and expertise required for such heavy due diligence is typically developed over time.

Commercial Real Estate

For the purposes of this article we will define commercial property as property used solely for business purposes.

Undoubtedly with commercial property the rewards are greater. The greater the rewards the more you have to go through.

  • Identifying the most lucrative market opportunities takes time, and effort.
  • Commercial properties are highly valued and the associated risks are greater. For this reason put emphasis on due diligence.

Residential Real Estate

Residential real estate is comprised of property that earns the vast majority of its revenue from dwellings. Becoming an investor in residential property is a great way to;

  • Create a property portfolio.
  • Earn some decent money.
  • Acquire equity.

All types of residential real estate transactions fit into one of these four categories:

  • Wholesaling
  • Fixing and flipping
  • Creative real estate investing
  • Holding rentals

It’s of great importance to appreciate that each of these categories carries varying combinations of capital needed and cash flow returned.

Wholesaling

Quite simply put wholesaling is all about placing a desired piece of real estate under contract. This act is carried out at a significant discount, then turning around and flipping that contract.

Buying, fixing and flipping

The buying, fixing and flipping concept is not as easy as portrayed on television. However; this practice is rich with opportunities. You can quite frankly make a significant sum of money. It does require a different set of skills and mindset than wholesaling. Going this route will require huge resources and access to good funding. Though the risks are greater, paydays will tend to be worth it.

Creative real estate investing

Creative real estate investing requires a lot of creativity. The spectrum of opportunities is very deep and quite wide. Creative real estate favours those who like to get into deals with little-to-no cash/ credit involvement. This is a great place to create streams of cash flow income.

Holding rentals

Building long-term wealth is the ultimate objective of all real estate investors. If you can successfully acquire, fix and flip real estate then you’re well on your way to owning a huge rental portfolio. Careful and correctly done structuring and financing will help create and maintain long term wealth through a rental/ cash flow portfolio.

Connecting to the local market (the nuts)

These resources will help you learn more about your local market:

Networking events

Networking events are a crucial process in the establishment of mutually beneficial business relationships. These forums are especially important to interact with other investors, pick their thought processes and catch up on market trends.

Local estate agents

Engaging a local investor centred real estate agent can be of great importance and help you quickly find the market hot spots.

Real estate investing paperwork

The thought of real estate investing paperwork can be quite daunting. Equipped with the right guidance and the assistance of a local investing attorney you can easily navigate your way through the paperwork.

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