subject: Investing Your Way To A Successful Real Estate Business [print this page] Real estate investing is not just all about finding the right property. In the last fifty years, it has become an increasingly popular investment vehicle. While yes, the real estate market offers plenty of opportunities for one to make a huge gain, getting into real estate investing can sometimes be even more complicated than just investing on bonds and stocks. In this article, we will share with you a few basic tips on how to get started with your real estate career.
Real estate trading Considered as the wild side of real estate investment, real estate traders purchase properties with the intention of holding them for a certain period of time and selling them only when the value starts to appreciate. This trend is most commonly referred to as buy and hold.
Rental properties This trend traces back to the old practices of land ownership. The investor buys a property and gets it rented out to a tenant. In this set-up, the owner and the landlord is responsible for paying all the taxes, the mortgage as well as the costs for maintaining the property. To cover all costs, the landlord charges enough rent or if he wants to gain more profit, he has the option to charge more. The most common strategy in this business; however, is to be patient and charge only minimal rent until the mortgage has been paid. After all the mortgage has been paid, majority of the rent becomes profit.
Leverage Aside from the REITs, real estate investing gives the investor a tool which is not available to other stock market investors. This is what we call leverage. If you want to purchase a stock, you may choose to pay the full value of the stock at the moment when you placed the buy order. Even though you buy from margin, your borrowable amount is still less than with real estate. A lot of conventional mortgages need a 25% down payment. As the investor, you can control the whole property as well as the equity it holds by paying only a fraction of the total value.
REITs Real estate investment trust (REIT) results when a corporation makes use of investors money to buy and operate income properties. The REIT is purchased and sold on exchanges just like any form of stock. Corporations need to pay out 90% of all its taxable profits through dividends so that it can keep its status as an REIT.
