How Does Real Estate Investing Work?

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How Does Real Estate Investing Work?

In the last 200 years, they said that a huge percentage of the world’s richest people became self-made and wealthy through real estate

So, is this just hearsay or is this a fact? 

Well, you might have heard it from the prominent billionaire Andrew Carnegie. Yup, he dropped that bombshell. And it turns out, he’s not the only one who believes so. Several rich folks say the exact same thing. 90% of affluent people, yup, you read that right —  made their millions through real estate. 

For the regular investor, real estate offers the foremost way to make lots of money. And just like in other ways of investing, it’s better to get kicking early on with real estate. Time is money, as they say. A great way to start is to buy your first main residence. 

Someone said buying real estate has made her filthy rich. There’s no need to buy something huge. Most of the real estate investors started out with a small studio unit. A few years on, when the value of the unit has doubled, they would sell it and plow the money as a downpayment in buying a small one-bedroom flat. 

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They just keep doing it and upgrading their residential unit until some of them have acquired a huge penthouse on the posh side of The Big Apple. Buying that small studio was a significant decision indeed. 

The goal is to keep on purchasing residential properties as your main residence, move there, live there, and then have them rented or sell them, and when you are ready, go get your next one. 

The cycle continues. Just remember though — you’re in here for the long haul. But once you’re there, these real estate properties that you put up for rent can churn out income all year round. You need to consider, however, the associated legal fees and other unanticipated expenses that go with renting out your property. 

In the real estate business, you have to make sure you invest in the right kind of property. Now, let’s qualify what “right” means. It means avoid buying properties in low-income places. Go for the properties that will definitely appreciate. 

Go for the top-end high-end properties. These types of properties will provide a steady cash flow and will obviously appreciate in no time. As they say, “the right investment will keep on appreciating.” There’s no way to go but up. However, buying those low-end properties is even better than storing your money in the bank — real estate will still appreciate. Regardless of place. Just give it time.

You know why? 

Because housing is a basic need. Humans will always need a place to reside. Real estate companies usually build houses because they see potential — they see the population growing and they see the need for the populace to have a place to live in. The real estate market continues to grow. As long as the population swells, the demand for housing swells and as we know, supplies come on the heels of demands. 

The demand does not only increase, but it is also consistent — all-year-round elsewhere. Therefore, there are more chances for constant returns with real estate than with other investments. 

Land will always be needed. The need for land in business is intrinsic. Whether you like it or not, the land is needed in whatever kind of business you decide to get into. Be it dairy farming, retail business, or the restaurant industry, people will need land and people will need space. 

It’s wise to invest in real estate properties that produce income — like vineyards or vegetable farms. Income-generating properties appreciate more. Also, invest in a property with a built-in value like buying a property in upscale locations.

There’s a wide range of options in how to get money from real estate investments. Putting your investments in stocks or bonds means you are depending on elements that are not in your control. Your choices are either to sell or to hold. 

In real estate, aside from buying and selling having it rented, or getting produce and income from the land, you can also try flipping as an option. House flipping is when you buy and sell houses for a profit with the intent of reselling them fast. Usually, the real estate investor would give the house some embellishments, some repairs here and there and preen it up a bit to increase its value. Malleability is the name of the game here. 

You can have your property developed, have it leased, add something to the package, have it subdivided, refinanced, or even rezoned. The options are limitless.  This is one of the main reasons why a lot of millionaires have been made because of real estate. 

There are some real estate investors who have actually lost in this game. It’s mainly because they have purchased some properties at their peak and disposed of them at an inappropriate time. Chances are, the equity was too high and left them without much profit upon selling it. In real estate, as mentioned earlier, time is your friend. In time, if you hold on, you will find huge appreciation.

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