Real Estate Investment For Beginners

Have you wondered about real estate investment? Have you heard people around you talk about how they are profiting from investments as a secondary stream of income? If you are a first time investor and looking into real estate investment, check out these basics to help you along the way.

The ultimate goal in investing in real estate is have your money work now to increase over time and give you more money in the future.

When you invest in real estate, there are four ways you can make money.

Real Estate Appreciation

Real estate appreciation is a simple concept. It refers to how the value of an investment property increases with time. The value of a property can change depending on what might be built nearby in the future like shopping centers, schools, restaurants etc. Another form of appreciation that can be considered is forced appreciation. Forced appreciation is when the value of an investment property increases once repairs or renovations are completed. Appreciation is unpredictable and can be considered riskier than investing for cash flow income.

Cash Flow Income

This type of income is when someone purchases an apartment building or home as an investment property where they collect rent. When you collect rent on a property that you own, this becomes a stream of cash on a monthly basis. There are different types of buildings that can be purchased to put money into your pocket each month. A storage unit, office building or a multifamily home are some ideas of properties that can produce cash flow.

Real Estate Related Income

There are several ways to make income in the real estate industry. Money can be made by a real estate specialist like an agent or a broker. These people make money in the form of a commission for helping a client buy or sell a property. Also, a management company can make a percentage of rent collected for carrying out the daily operations of a property.

Ancillary Real Estate Investment Income

For some investors, this can be a major source of income. Ancillary income can include vending machines in office buildings or laundry units in apartment complexes. These streams of income provide extra opportunities for investors to make money. Another way to supplement your income is with application, admin, rental premium and pet fees. The list of opportunities to increase the cash flow on properties is endless.

Tip for Your First Property Investment

It is best to purchase investment property through a legal entity like a limited liability company or limited partnership because it will minimize the risk. You should consult with a lawyer to see what the best form of ownership is for your circumstances. These legal entities can protect you personally from any lawsuit or if things go south with your investment.