Buying investment real estate can be an intimidating endeavor, especially for beginners. Traditionally, it was something undertaken only by the rich. Today, however, more and more middle-class investors are getting into real estate and it’s not hard to see why. Real estate can be very rewarding financially, often thriving even in a slow economic cycle.
Below are three smart tips to help you get started in real estate:
1. Start Modestly
The first and most important aspect to remember when investing is preserving money. “Market growth is slowing down,” explains Schoffler. “When you’ve worked hard to save money you can finally invest, you need to be careful to not just invest it anywhere. I recommend starting out by investing with a more conservative approach because I’ve done it the other way and lost.”
“If you adopt the investment concept of compounding — the process of increasing your return based on reinvested earnings — you might be surprised what you could earn over time. But you need to be comfortable playing the long, rather than short game. Make sure your investments will perform well in both an up and down economy.” Read more at Entrepreneur…
While big investments yield big returns, it is always wise to start out small if you are a novice in real estate. Rather than start out big and experience slow market growth, it is better to save your money and invest small amounts first. Once the market starts to grow then you can invest more money. Real estate, much like stock market investments, is a long-term process that compounds over time.
2. Do Not Purchase Investment Real Estate in Your Name
You will almost NEVER purchase a real estate investment in your own name. Instead, for risk management reasons, consider holding real estate investments through special types of legal entities such as limited liability companies or limited partnerships (you should consult with a qualified attorney for his or her opinion as to which ownership method is best for you and your circumstances). That way, if the real estate investment goes bust or someone slips and falls, resulting in a lawsuit, you can protect your personal assets because the worst that can happen in some circumstances is you lose the money you’ve invested. Read more at The Balance…
One of the benefits of having a real estate lawyer is getting the right advice on issues like these. If you are buying a personal home, it almost always has to be in your name, especially if you’re getting a mortgage to finance it.
3. Set Goals
Earl Nightingale, an author and successful insurance broker, best known for The Strangest Secret, put it best when he asked the question, “Where do you see yourself based on the actuarial statistics for 100 men at age 65?” At the time (1950s), the statistics were that one was very wealthy, four were very well-off, five were still working, 54 men were dependent on others, and 36 were deceased. What he noticed was not so much that 36 of the men were deceased, but that there was a common trait in the top 5%—they all set goals! Read more at Bigger Pockets…
Real estate investment, much like anything else, requires a plan and goals to be set when you are starting out in order to succeed. This plan will map out the process of investment.
If you need more advice on real estate investment and beginner tips, get in touch with us at (704) 800-5901. At Meek Law Firm South, we deliver personal and professional legal advice for all your real estate investment endeavors.