Investing in Real Estate – What You Should Know

Real estate has always been that one extra source of income for some people, while others made it into a very lucrative business. However, before you start flipping houses like a pro, you need to understand that there are several ways real estate can make you money and they all have their own risks and benefits.

Flipping a Home

This is, easily, one of the most popular ways of making money in real estate. The practice of house flipping has been popularized in movies and series and essentially boils down to buying a property that needs to be repaired for as little money as possible, doing all the repairs and aesthetic fixes, and then selling the property for profit. It sounds easy enough and there is very little paperwork compared to other forms of investment.

However, it is extremely risky. Every property you buy can either be a hit or a miss and there is little way of telling which it is. You have to consider several factors, like taxes, whether the house is a fixer-upper or not, account for any unforeseen repairs and expenses, and finally face against the housing market and the economy in general.

Landlords

One way to turn a property into a goose that lays the golden eggs is to own it and rent it. Being a landlord gives you a steady monthly income without the hassle of a full-time job. That being said, you are now responsible for one additional property and its lawsuits, repairs, fines, and modifications. Turning a blind eye to your tenants’ complaints can be very costly in the courthouse and may even result in jail time. Furthermore, there are no guarantees that your tenants are going to be upstanding, friendly, and quiet people.

Landlords have a way of earning more money in the long run by purchasing a building and renting out separate apartments which they later sell as condos. That way, you get a stable income right now with a chance of making a lot of money in the future. You can also move into your building and save some money on housing expenses for yourself.

Investment

Finally, we arrive at the reason you have chosen to read this article in the first place – investment. There are several ways you can go about approaching this. You can invest in a REIT, or real estate investment trust, if you want to treat real estate as stocks. Alternatively, you can try an online investment platform, which will guide you one step at a time through the process of building your portfolio.

Now, here’s the rub – you need to have money to invest in real estate. There is no way around it and, though it is tiresome to hear the cliché, you need to spend money to make money. The only bit of advice we can give on the matter is to approach all investments as risky stocks and not to invest any money you are not prepared to lose.