Real Estate Investing

When you’re beginning your venture into real estate investing, there are a few simple rules to follow. These basics will help ensure that you’re in an advantageous position to be successful without risking your financial security. 

Investing in real estate will require you to build-up your cash reserves. A strong cash position will make sure that you’re not leveraging your assets, such as your primary residence or your business, to meet cash requirements necessary for things like downpayments and closing costs. There are several different strategies that require low up-front investment that are ideal for the beginning real estate investor. Some of these are lease options and purchases from foreclosure listings. 

With the tightening of credit and widespread changes in the mortgage industry, financing options for real estate investing has become a bit more challenging. However, building your cash position can eliminate some of these challenges. 

Financing aside, there are several different options available for those exploring real estate as an investment. Different strategies will suit investors of different risk tolerances and experience levels. Here are some of the most common investing options for the real estate sector:

• Rental Property: Includes residential (single family homes, townhomes, condos) and commercial (office or retail space)
• REITs: Also known as Real Estate Investment Trusts. These are funds comprised of multiple properties and managed by a fund manager. They can be residential, commercial or mixed in focus.
• Trust Deeds/Mortgage Notes: Also known as hard money lending, these are real estate investments where you act as the lender to a private party. These are often good for beginning real estate investors because you can pool your money with other investors in “fractionalized” notes.
• Property “Flipping”: These are investment property acquisitions that are purchased at a perceived discount or other price and intended to be held for a short time and sold at a profit due to escalating market conditions.
• Rehabs: Many real estate investors enjoy the process of purchasing properties in poor repair at a discount and completing renovations to significantly improve the value.

Depending on your financial goals, the real estate investing strategies you choose to pursue will vary. The best rule of thumb for beginners and seasoned investors like is to diversify your holdings, maintain adequate cash reserves and do your due diligence prior to engaging in any purchase. 

To begin reviewing options for real estate investment such as REO or bank-owned properties, foreclosure listings, multiplexes, single family homes and more, visit InvestorLoft.com. Register for your free account today and receive access to our in-depth tool set for real estate investors. Search for properties by cap rate, cash flow, cash on cash return, down payment and more – it’s a smarter way to search for real estate investments!

The information contained herein is for educational purposes only and not intended to replace the experience counsel of your real estate professional, attorney, tax professional or other advisor. Before initiating any transaction, InvestorLoft recommends you seek professional guidance and perform the necessary due diligence in order to make the best possible decisions for your specific situation.