A lot of investors will tell you that real estate is the most lucrative investment to make in regards to the return on investment.  While there are others who have invested in real estate that will tell you the complete opposite.  They may have invested in real estate and the tenant stopped paying the rent, leaving them in a financial bind, and/or the property was on the market for a long period of time and they had to reduce the cost to sale the property to be able to get rid of it and avoid getting into a financial bind or that they didn’t understand the terms of the mortgage and instead of securing a fixed loan, they secured a variable loan, where the amount increased and became unaffordable, or the property taxes increased and the amount became unaffordable and they lost the property to foreclosure.  Investing in anything is not without risk.  Some investors will tell you that it is safer to  invest in Real Estate Investment Trust (REIT), which is compared to mutual fund investments, they are companies that own commercial real estate such as office buildings, retail spaces, apartments and hotels.  They usually pay high dividends.  However, they can also be complex.  Some trade on exchanges like stock.  It is recommended that new investors should invest in publicly traded REIT’s that can be purchased through a broker, who will tell you what you need to do to set up a brokerage account, if you do not have one set up already.  Expect that there could be a minimum investment required.  Also, consult with whether or not the broker charges a commission fee, prior to agreeing to set up a brokerage account with any particular brokerage firm.  You can also think about whether or not you can afford to invest in buying property that you can have as rental properties for income.  You can also consider renting out rooms or setting it up as an AirBnB, when large events come to your town.  First, know that you have to contact your City Revenue department to find out what you need to do to secure a real estate license to make sure that you can rent out your property and receive compensation.

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Most people who invest in property, invest in low cost property that have a low purchase price, but you may have to renovate the property and then either resale it, or rent it.  If you decide to buy a property as-is and it is in need of repairs, it is beneficial to you to take a home remodeling contractor with you to view the property to tell you how much the cost could be to remodel the property.  You could find that the cost outweighs what you can afford, should the house stay on the market longer than you anticipated and/or if you rent it and the tenant stops paying you and you have to still continue to pay the mortgage.   So, before investing in anything, make sure that you can afford the investment and still maintain your current lifestyle, if things to do not go as planned.  You can also consider living in the property until after you have saved the money to fix the property to better living conditions and then either sale or rent it.  Know that if a tenant damages the property, you could be responsible for the repairs, unless you pursue legal action through the court system, which will also incur cost.  If you or someone you know can do the home repairs/remodeling yourself, real investment could be ideal for you.

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To learn more about investing in Real Estate watch this YouTube video by “Bigger Pockets:” https://youtu.be/X3P3qqywbTI

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By Jason Torrents