INVESTING IN REAL ESTATE FOR PROFITS - Anthony's Library and Resources

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Monday, 3 October 2016


For many years now, plenty of people that are wealthy have gotten that way through investing in real estate.  Real estate investments are one of the things that can bring ongoing financial profits every month.  When it increases in value, your investment becomes that much more important and profitable.  You can get your money’s worth when the value of your real estate investment increases.  However, people that are interested in real estate investment need to know that it is more than just making money. 

There are many things you need to consider if you are interested in investing in real estate, in particular residential real estate.  There is no doubt that you can be very wealthy with this.  However, you will have to stay in it for the long haul in order to make it work for you.  If this is your first foray with this, you will want to weigh your options as far as how you will purchase your initial property.  Not a lot of people have the entire amount up front to purchase the property with cash. 

So, instead of saving, some people will go ahead and get a loan in order to get started.  Some experts say that it is better to wait and save your money first.  This way, the monthly income that comes in will go to you instead of the lender.  You will also be able to build wealth quicker by paying the entire amount in cash. 

However, it is still possible that a bank will loan you the money you need in order to get the property.  If you go this route, make sure that you have some backup funds in the event you get in a financial rut.  At least you will still be able to pay on the loan. Of course, the better situation is to have all of the money up front and pay cash outright for it. After that, you would only be responsible for repairs, maintenance, taxes and other miscellaneous items.

When considering a property for investment purposes, you will need to know how much it will cost you in taxes.  Every year, you will have to do this or you could find yourself with a lien on your home.  In addition to that, you will need to determine a monthly rent amount for whoever you allow to stay there. 

Some investors will go through a rental or management company to get their rent.  This can release some of the duties from your schedule.  On the other hand, you will have to shell out more money to the company for outsourcing. Only when you are financially able, should you do this.  As a beginner investor, you should be responsible for collecting the rent and other fees as deemed appropriate.

Make sure that you have enough money put away for repairs, expected and unexpected. You never know when something will stop working in a split second.  It’s better to be prepared that unprepared for things such as this.

Why People Invest In Real Estate
Many people know that real estate investing is very lucrative.  For that reason alone, will make people want to get their share of the pie.  They know that this is a great way to build wealth, not only for them, but they can also pass it down to their future generations.

With appreciation of rental properties, there will be increased value.  In turn, this could help with the selling and reinvesting in properties that already have a higher value.  Appreciation of rental properties can also make way for an equity line of credit for future use. Speaking of equity, you as an investor can invest in sweat equity, which involves making improvements to your real estate property.  It doesn’t have to be so far out where you end up spending a lot of money. 

This can help the value of your property go up faster than it would have if you had not made improvements.  So, if you spend $3,000 on cosmetics and miscellaneous items, then the value of the property could be double or more of the amount you spent on improvements. Being a real estate investor during inflation times is not necessarily a bad thing. Even though rental payments increase during this time, your mortgage loan payments should remain the same.  Because of this, you can have an increase in cash flow. 

Another thing about inflation is that you can also gain more renters (if you have vacancies) because some people may not be able to secure mortgages during that time.  Since you will have a greater demand for renters, the rent will also increase.  This is part of the agenda of supply and demand.

Using “Other People’s Money”, or “OPM”, is a good reason for people to invest in real estate.  You can find a bank that will secure a loan for you for your real estate investment(s).  The better your credit is, the better chance you have of securing a good fixed rate loan with low interest rates. 

You can also look at zero-down loans, but that can be more risky.  You would have to pay more in your mortgage payments because you didn’t include a down payment.  So when the property appreciates, it will benefit you along with the monthly cash flow.

Real estate investing is considered a business.  You can use the expenses from it and deduct them from your taxes.  Anything that you purchased, had repaired, any fees and anything else related to the investment in question. 

Even if you have properties that are out of the regional area where you have to travel, those expenses can also be deducted from your taxes.  If nothing else, being able to deduct expenses from your taxes is like a marriage made in heaven.

Have you heard of getting cash that is tax free?  Say you have an increase in rentals and you end up having a positive cash flow.  The surplus can be used for other things.  If it’s the right time, you may think about wanting to refinance the rental properties. 

When an investor uses profits from another property sale and invest them in another property, they can hold off on capital gains for future real estate transactions.  More than likely, the investor will work on getting additional equity and more income and profits from additional property rentals.

Using Real Estate Investments as Passive or Residual Income
The money from real estate investing can be used as passive or residual income.  Either way, you will consistently have money coming in from your property rental(s).  There are some things that you need to know in order to keep the money coming in.

In order to start the wealth process with real estate investing, get one property first.  Seek one that does not require a lot of work and is suitable for renting out to prospective tenants.  You can look for foreclosures in addition to other types of homes. 

People can get foreclosed homes for a steal, usually at auctions.  The banks are desperately trying to get rid of these homes because it will be a loss for them if they keep them. You will still be able to make an investment once you get it fixed up and suitable for living purposes.

If you stick with the real estate investments, you will eventually profit from them.  Don’t look for an overnight windfall.  You have to build your wealth with real estate investing.  There will be those times when the economy and real estate market will change.  However, you will still be able to profit from it, as long as you hang in there. 

When you are making passive or residual income, you are making money when you own rental properties and not having to do the work on the property itself.  Rental properties can help to keep money in your pocket. 

Eventually, you will make enough money from these properties so that you will not have to work a full-time job anymore.  For the most part, that is a goal for most people.  They key to building wealth is to stay with it and not get discouraged if you have patterns of lack of rental income.  There will be some properties that will generate income all the time, while others may be spotty.

Your goal is to make you and the bank happy by bringing in constant income and not having to work long hours for little pay.  That will come in time.

Why Real Estate Investing Continues To Have a Market
There will always be businesses that will thrive in their season.  There are others that will thrive for a moment, and then they fail and end up closing shop.  For those who are interested in real estate investing, the same thought may cross their minds.  Of course, you have to make sure that you are in the right place at the right time to get properties and get tenants in them. 

Like everything else, there is a rise and fall in the real estate market in general.  Even with that, you can still benefit from real estate investing.  In fact, when the economy is not at its greatest, this becomes some of the best times for potential real estate investors to get great deals for investment properties. 

The prices of properties are lower, because the banks want to sell and get rid of them.  This can be a great deal for those who can get in the market quickly to snatch up those homes and use them as rental properties.  There will always be someone that is looking for a place to live.

Another thing about the market is that you still have some stability, even with a downturn in the economy, as described above.  Don’t think that when there are economic downturns, that it is the end of the world.  It isn’t.  People don’t realize that it is one of the best times for people to purchase property at an affordable price and sometimes a real steal.

Profiting With Real Estate Investments
One of the most,  if not the most important thing to know about real estate investments is to make sure that you will have a consistent cash flow.   If you don’t have a consistent cash flow coming in, then you’ll have a difficult time creating wealth in real estate investing. 

Having rental properties and getting income from them is one of the best known ways to profit and keep a consistent cash flow going.  The more rental properties you have, the better chance you have of creating sufficient wealth streams for you and your family.  The good thing about this is that even though there are risks, with a market downturn, money will still flow in.

Have you thought about paying off your mortgage?  Well, now may be a good time to start.  The more you pay off, the more your equity increases.  If need be, the equity can be used for other things. 

If you can afford to get an equity loan, the money could be used for investing in other properties.  Keep in mind that you don’t want to get in over your head with more debt, so only do this if you can make the loan payments without any problems.
If you want to get a better price for your property, you may want to spruce it up a bit.  Make some upgrades to it so that it will look presentable.  This is a great way to increase value and prospective renters will also see the value in what you have accomplished.

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