Real Estate Investing
When you’re beginning your venture into real estate investing, there are a few simple rules to follow. These basics will help ensure that you’re in an advantageous position to be successful without risking 
your financial security.
Investing in real estate will require you to build-up your cash reserves. A strong cash position will make sure that you’re not leveraging your assets, such as your primary residence or your business, to meet cash requirements necessary for things like down payments and closing costs. There are several different strategies, that require a low up-front investment, that are ideal for the beginning real estate investor. Some of these are lease options and purchases from foreclosure listings.
With the tightening of credit and widespread changes in the mortgage industry, financing options for real estate investing has become a bit more challenging. However, building your cash position can eliminate some of these challenges.
Financing aside, there are several different options available for those exploring real estate as an investment. Different strategies will suit investors of different risk tolerances and experience levels.
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Here are some of the most common investing options:
- Rental Property: Includes residential (single family homes, townhomes, condos) and commercial (office or retail space)
- REITs: Also known as Real Estate Investment Trusts. These are funds comprised of multiple properties and managed by a fund manager. They can be residential, commercial or mixed in focus.
- Trust Deeds/Mortgage Notes: Also known as hard money lending, these are real estate investments where you act as the lender to a private party. These are often good for beginning real estate investors because you can pool your money with other investors in “fractionalized” notes.
- Property “Flipping”: These are investment property acquisitions that are purchased at a perceived discount or other price and intended to be held for a short time and sold at a profit due to escalating market conditions.
- Rehabs: Many real estate investors enjoy the process of purchasing properties in poor repair at a discount and completing renovations to significantly improve the value.
Depending on your financial goals, the real estate investing strategies you choose to pursue will vary. The best rule of thumb for beginners and seasoned investors alike is to diversify your holdings, maintain adequate cash reserves and do your due diligence prior to engaging in any purchase.
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