Real estate investing seems simple in theory. Real estate as an investment is inherently easier to understand than stocks or bonds, since real estate is tangible. But despite its apparent simplicity, there is a lot to understand about investing in real estate.
So, here are four questions to help you learn about yourself and how to invest in real estate.
#1 Should You Own Individual Properties or Invest in a REIT?
Investing in a REIT (Real Estate Investment Trust) is similar to investing in a company stock. REITs typically invest in multiple, large real estate projects, and investors in the REIT collect dividends based on the net profits of the investments in the trust.
REITS are good investments for beginners in real estate investing, and for people who are not interested in owning individual properties. The minimum investment is a REIT can be as low as $500 – $5,000, making it one of the easiest and less expensive methods of real estate investing.
For investors wanting to produce higher profits, individually owned properties are often the most profitable investments, but the entry price for these investments can be higher.
#2 Should You Join a Real Estate Investment Group or Investment Partnership?
Investing through a real estate investment group (REIG) or investment partnership allows investors to individually own real estate investments as a member of the group. The group purchases, rehabs, and manages the properties for a fee.
Depending on the properties, and the structure of the REIG, the initial investment for members of a group generally ranges between $5,000 and $50,000.
An investment group that accepts a small investment such as $5,000 would also be setup, of necessity, to allow for fractional or co-owned investments.
REIGs and real estate partnerships provide a monthly cash return on investments. They also make owning individual investment real estate easier, and sometimes allow for a lower price of entry compared to buying individual properties. But, the convenience is at the price of lower profits.
#3 Should You Own Rental Property?
Most real estate investors who own individual properties specialize in either flipping properties, or holding them as rental property. The majority of their real estate purchases, then, are aimed toward either flipping or holding. So, deciding which specialty on which to focus is an important decision.
Real estate investors who specialize in rental property work toward building an investment portfolio focused on generating income and long-term wealth. Rental properties can provide investors with a generous income, can be leveraged to purchase additional properties, and can cumulatively build long-lasting wealth the investor can pass to future generations.
Investors in rental property can self-manage their properties, but more often these investors use industry professionals to find, buy, rehab, and manage their properties.
#4 Should You Flip Investment Properties?
Flipping investment properties can generate healthy profits very quickly. A flipper buys a property, rehabs it in weeks, and sells it for a profit.
The best flippers tend to have a real estate background in some form.
Realtors and real estate wholesalers have the expertise to buy and sell investment properties, while also having a good working knowledge about designing and rehabbing properties. General contractors, designers, and other rehab professionals, have the expertise to transform the property into a desirable home or office.
So if you are considering flipping real estate, consider whether you have the industry expertise required to quickly purchase, rehab, and sell these properties. Also consider whether you have the financial resources to comfortably complete the flip, especially if it sits on the market for several weeks while you pay the carrying costs.
Graystone Investment Group
Graystone Investment Group is an experienced Investment Group wholesaling properties in the Greater Tampa Bay market since 2005.
Clients we service include individual real estate investors, real estate investment groups, investment partnerships, and institutional investors.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.