The Basics Of Investing In Real Estate

Author: Kent Hamilton

Investing in real estate has made people independently wealthy than any other type of investment, but it is not a venture to be taken lightly. There are many things that anyone starting a rental business should know before they are investing in real estate.
Of course, if you are going to be investing in real estate, you are going to need to successfully evaluate properties for their investment potential. The potential of a property depends upon so much much more than its rent. Several other factors go into determining if a property is a sound investment. In addition to familiarizing yourself with these factors, you are also going to need to know the law regarding landlords, tenants, taxes, discrimination, and accounting.
Initially, you need to decide what type of property you want to invest in. For example land, commercial, residential, etc. Residential properties are defined as single family homes, duplexes, and multiplexes even though structures with over four units are sometimes considered commercial property.

Second, when you decide to start wholesaling real estate, you need to determine where that real estate should be. You might decide to stay close to home, or to buy property near places you would like to visit or to spend a vacation. You may be able to write off travel expenses. You may also want to seek real estate in growing communities and places where real estate is expected to appreciate, but this is a much riskier way in which to invest in real estate.

There is still a good amount of speculation even though the high number of foreclosures on the market today would make you think that it is a no-brainer. When you take the risk of flipping a property you increase the rate of short term capital gains and these added taxes and expenses are unavoidable.

This type of real estate investing can be compared to day trading. It has the potential to make a lot of money quickly, but it also has the potential to lose a lot of money fast. This is not for the inexperienced patron. It is not a good, initial secure base to build your investment business on.
Once you have done your research and determined that you want to invest in rental property you will need to decide where the property will be located whether it will be residential or close to home. After deciding this you will be able to ascertain which property has the greatest potential to give you the highest return.

That will depend upon what you are currently investing in, what you are making now, the way in which you seek to develop your realty portfolio, how old you are, the amount of spare time you can set aside, what your long-term intentions are, and how expensive your needs are. You must also decide whether you are looking to acquire cash flow income or prefer to earn cash quickly by risking a property flip.

One of the easiest and low risk way to make cash with in this business is by becoming a Real Estate Bird Dog. You simply find a property for an investor, put it under contract and sell it to the real estate investor without ever touching the property. This is easier said than done but you can potentially make 1k - 2k per deal.