For anyone that owns a home or a piece of property, you are already a real estate investor. Once you own your first property like apartments for rent in Tempe, it is easy to envision building a real estate empire. As with all investments, there is money to make, but you need a good plan and information to succeed.
Where Real Estate Should Fit in Your Personal Finances
Before you start picturing yourself as the next Barbara Corcoran, Mark Cuban, or Stefan Soloviev, it is essential to keep in mind your real estate investing should fit well in your overall investment portfolio. Real estate is just one asset class and must be part of a well-diversified portfolio.
Becoming a landlord is a great way to make money in real estate. You then hopefully have the benefit of not only your property going up in value but the rental income the property offers can offset costs such as taxes and loan payments.
Quite a few people in the market try to flip properties. They are taking undervalued properties, fixing them up, and then trying to sell them for a profit.
If you want to dip your toe into the real estate market just a little bit, real estate investment trusts can make a good choice. These give you exposure to the real estate market without personally having to operate, own, or finance the properties.
Some of the Information You Will Need To Succeed
People consider real estate a sound investment because, by and large, real estate prices continue to grow year after year. While there can be temporary dips, over the long haul, you should make money when owning real estate.
That is one reason that understanding historical prices, or what often get referred to as comps, is so important when investing in real estate. Making money in real estate is nearly impossible when you overpay for properties from the outset.
You must also understand every single expense you will incur when you own a piece of real estate. What this means for novice investors is that you need to do your homework regarding tax rates, insurance costs, financing costs, and ongoing operational costs for your real estate investment.
With so many different investment opportunities, real estate offers an excellent way for even beginners to make money in both the short and long term. The key to success is to think carefully about your choices of investments, do plenty of homework, and continually assess your progress.