Perhaps you’ve recently had a sudden windfall of cash from an inheritance. Perhaps you’ve recently retired, but still want to invest your money wisely to make more, or your company is looking to expand its portfolio. Whatever the reasons are, you might be thinking it’s time to ask the question, should I invest in real estate?
There are many kinds of real estate to invest in: commercial real estate, rental properties, you can even invest in a real estate investment trust or REIT. A REIT, though not as liquid as owning a property, allows you to invest in commercial real estate and share in the profits garnered from it with your real estate partners, without actually going out and purchasing the property yourself. How to invest in a REIT is fairly simple, as there are many kinds, including ones that are publicly traded, and you should speak to a broker about your best options.
If you’re more interested in straightforward income-producing rental properties, there are several steps involved. It would be worth you taking your time to consider all of the extra obligations and tasks that come along with renting out a duplex, apartment, condo, or single family homes. This is not commercial real estate, which is solely for business purposes, and involves properties for offices, retail stores, and other non-residential businesses.
- Look for Neighborhoods First. You want to make sure that the property you buy is affordable but also in the best neighborhood that you can find. This includes scoping out the nearby school districts to make sure that they’re good enough that families might want to move there. Look for new infrastructure in the neighboring area, such as new schools and surveyed land: this indicates that the area is “up-and-coming.”
- Become Familiar with Pricing. Once you’ve found your neighborhood, become familiar with the properties on the market and their prices. As time passes, you’ll become acquainted with what properties are worth, and what good deals might be out there. This should eliminate the chance of overpaying for your property, and also eradicate worries over “should I invest in real estate?”
- Don’t Do it Alone. Since you’ve more than likely already purchased a home for yourself and your family, you don’t likely need help with figuring out how to get good financing, but a wise expenditure could be to hire a management company. Unfortunately, you won’t be accruing extra money from tax breaks or parking fees like commercial real estate, but a management company will help with maintenance on the property (which you’ll especially want after more than likely having to spend extra to get the house up to code once you purchase) and will deal with the tenants for you. Once you start covering your mortgage with the rent, you’ll never ask yourself “should I invest in real estate” again.