The Beginner’s Guide to Investing in Real Estate

The Beginner’s Guide to Investing in Real Estate

Every real estate mogul starts somewhere. You may never have thought much about becoming an investor in properties—and in fact, you may not even know where to begin—but actually, with the right expectations and a bit of direction, getting started in real estate can be quite rewarding. That’s even true for the investment novice.

The Perks of Real Estate Investment

To begin with, consider some of the advantages of an investment in real estate.

  • For many investors—especially those who do not work in finance, or have never thought much about investing before—real estate is simply more comfortable. You may not know much about stocks or mutual funds, but you do know about houses and apartment buildings.
  • With a piece of property, you can actually, physically inspect it—which means you can usually have a pretty good sense of exactly what you’re paying for.
  • Real estate is also known as a powerful tool for inflation, and a great way to diversify an existing portfolio.

Drawbacks to Real Estate Investment

With that said, it is also important to be clear about some potential drawbacks:

  • Compared to stocks or bonds, real estate requires a lot of maintenance—keeping up with the property, keeping tenants happy, etc.
  • If you have an unoccupied property, it could essentially cost you money instead of making you money.
  • The money you invest in real estate is not liquid; that is, you cannot sell a property quite as quickly or as easily as you can sell a stock.

Different Ways to Invest in Real Estate

Once you are clear on those pros and cons, you can start thinking about different ways to invest in real estate—different options available to the first-time investor.

One of the easiest ones is the REIT, or real estate investment trust. You invest in one of these the same way you might invest in a stock or a mutual fund—so, you’re not actually buying a physical property. Instead of getting a little piece of a corporation, though, you’re getting a little piece of various real estate transactions, all pooled into a kind of a fund. This is a really straightforward way to enjoy the perks of real estate investment!

Something else that’s important to note: Buying a home for yourself and your family is also an investment, even if that’s not necessarily how you think of it. If you’re new to property buying, this may be the most logical place to start. Get a home and invest some time and elbow grease into making it even better—thereby improving the value of your investment.

Property flipping, multi-family dwellings, and warehouse space can also work well. The possibilities are endless—so why not think about getting into real estate today?