Real Estate Investing information, ways to generate substantial returns.
Real Estate Investing information can be surprisingly new thing for many for obvious reason which is school, college don’t teach us how to invest in properties. You need to take real estate classes in community colleges or from other private tutors by paying fee.
Because Real Estate Investing information may be an unfamiliar investment opportunity doesn’t mean YOU have to avoid it. IF done properly, real estate can be VERY lucrative and reliable way to generate substantial returns. Many people have made fortunes from real estate investing as in this type of investing, you can leverage. Real estate can create a consistent income stream, appreciation potential, portfolio diversification, and tax advantages.
Learn how to get started (or restarted) in Real Estate Investing information & avoid overwhelm. This step-by-step guide will take you from start to finish.
Real Estate Investing information
We SHALL discuss on
1. What is real estate investing
3. Equity Funds / Stocks
4. Airbnb – New type of renting platform
5. House flipping
6. Rental Properties, Apartments, Condos
1. What is real estate investing
Real Estate Investing information gives you one tool that is not as easily available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order. Even if you are an individual investor buying on margin, the amount you can borrow is still less in total than what you can easily access for a real estate purchase. In high level, real estate investing is basically, you buy a property and rent it out to a tenant or sell for profit! –Investopedia
A Real Estate Investing information trust (REIT) is a company that makes debt or equity investments in commercial real estate. Generally, REITs offer a portfolio of real estate to investors. Investors buy shares of the company and earn income from its debt and equity investments in the form of dividends. Similar to a mutual fund, REITs were created as a way to give ordinary investors public access to real estate investments. By law, a REIT must earn at least 75% of its gross income from real estate and invest at least 75% of its assets in real estate. Additionally, it must distribute at least 90% of its taxable income to shareholders each year. REIT Stock example
A closed-end fund (CEF) or closed-ended fund is a collective investment model based on issuing a fixed number of shares which are not redeemable from the fund. Unlike open-end funds, new shares in a closed-end fund are not created by managers to meet demand from investors. Instead, the shares can be purchased and sold only in the market, which is the original design of the mutual fund, which predates open-end mutual funds but offers the same actively-managed pooled investments. –WikiPedia
3. Private Equity Fund
A private equity fund is an investment model where investors pool their money together into a single fund to make investments. They are usually limited liability partnerships with a designated manager or management group. While the manager actively manages the equity fund’s investments, investors are not necessarily required to be directly involved on a regular basis. However, as an investor it is important to have the financial and real estate knowledge necessary to understand the risks and potential returns of each investment, because minimum investments are generally quite high.
Access to private equity funds is generally limited to accredited and institutional investors with high net worth. Investment minimums can vary, but are usually not less than $100,000. Private equity funds typically use a “two and twenty” model, in which they charge a 2% annual management fee and an additional 20% fee on any profits that the fund earns. Private equity funds are generally liquid as well, and therefore necessarily limited to investors who can afford to tie up large amounts of money for long periods of time.
Real Estate Investing information? House-flipping is the most active, hands-on way to invest in real estate. In a house flip, an investor purchases a home, makes changes and renovations to improve its value on the market, and then sells it a higher price. House-flipping is generally short-term, because the longer the investor owns the home without leasing it to tenants, the more their expenses add up. This eats away at returns when they sell it. Investors can repair or renovate the home to increase its sale price or sell when its value in the housing market increases.
If you watch HGTV, then you have probably watched a house get transformed from rags to riches in under 30 minutes and sold for a sizable profit by house-flipping pros. In these shows, house-flippers buy a home that they believe to be under-priced, add value through renovations — such as replacing counter tops or flooring, or tearing down walls to change floor plans — and then sell the home at a higher price to turn a profit.
While house-flipping is exciting, it also requires deep financial and real estate knowledge to ensure that you can make over the home within time and budget constraints to ensure a profit in the housing market when the home is sold. The success — and the financial burden — of a house flip falls entirely on the investor. You need enough cash for a down payment and/or good enough credit to secure a home loan in order to buy a property before another flipper does. It’s a high-pressure and high-stakes real estate investment that makes for great TV, but a good investment opportunity only for certain knowledgeable investors.
Another property-flipping option is wholesaling. Wholesaling is when an investor signs a contract to buy a property that they believe is under-priced and then sells it quickly to another investor at a higher price for a profit. Most often, wholesalers seek out properties in need of renovations and sell them to house-flippers who are willing to perform the renovations. An investor will sign a contract to buy a property and put down an earnest-money deposit. Then, they quickly try to sell the home to a house-flipper at a premium, earning a small profit. Essentially, a wholesaler gets a finder’s fee for brokering a home sale to a house-flipper. However, unlike traditional brokers, a wholesaler uses their position as the home buyer to broker the deal.
Wholesaling is a risky venture, also requiring real estate and financial expertise. It demands due diligence and access to a network of house-flippers in order to find a buyer within a time frame to sell at a profitable price. Otherwise, like house-flipping, you risk not earning a profit or, worse, losing money.
5. Rental Properties
Rental properties also require hands-on management, but unlike house flips, they have a long-term investment horizon. Any type of property (residential, commercial, or industrial) can be a rental property. Property owners earn regular cash flow usually on a monthly basis in the form of rental payment from tenants. This can provide a steady, reliable income stream for investors, but it also requires a lot of work or delegation of responsibilities to ensure that operations are running smoothly.
First, you must find tenants for your property. This may be easy or difficult depending on your property type and available resources for finding tenants. You are also responsible for performing background screenings for prospective tenants (if you want to) and providing legally sound lease agreement contracts with tenants. For each month that you do not have a tenant, you miss out on income from your investment.
Once you have tenants, you have a litany of resultant duties. As the landlord, you are responsible for rent collection, property maintenance, repairs, evictions, record-keeping for the properties and ensuring legal compliance on all matters. Depending on the number of rental properties that you own, property management can be a part-time or full-time job.
Some real estate investors who don’t want to handle the management of a property contract a property management company for a fixed or percentage fee. This takes some weight off an investor’s shoulders, transforming the real estate into a more passive investment. However, this trade off also means that an investor cedes some control of their properties and lose a portion of their monthly income.
Airbnb is a software, platform, tool which allows residents to rent out homes, properties on a nightly basis, usually as an alternative to a hotel. Airbnb rentals are similar to rental properties, but they are confined to residential properties and usually only available for short-term periods. Unlike traditional rentals, Airbnb lets you rent out a portion of your home, or your entire home. Owners MAKE PROFIT by renting their property by the night. Property owners are responsible for furnishing and maintaining the home for renters.
Airbnb rentals require much less expertise and supervision than traditional rentals for several reasons. Airbnb wensite facilitates the booking of the rental property and creates the contract agreement between the property owner and renter. Because Airbnb manages several components of the rental process, Airbnb rental properties can be a part-time job or side hustle.
Homeowner associations have the power to ban short-term rentals, and in some cities, such as New York, there are existing bans against types of short-term rentals. And, make sure that you’re prepared to handle any possible headaches that may come up under Airbnb’s hosting policies.
–Source – https://fundrise.com