If you invest in physical property, you can control your investment. You could also have a totally passive investment that you don’t need to manage. In a Great Recession type of event, prices can collapse and take down your entire portfolio. Can be a source of steady monthly income payments. With the amount of leverage required, even small price drops can wipe out your whole investment. Can reduce your overall volatility through diversification and lower price movements in general. If you choose to flip houses or personally own rental properties, it can turn into a career in itself and use up significant free time. This can lead to long-term wealth through the use of leverage. Up-front costs can make initial investments difficult. You need to save enough for the down payment and to cover cash flow shortages when there are vacancies
How to get started in Real Estate?
If you choose to invest in real estate, follow these five steps to get started:
Real estate has some of the most expensive barriers to entry of any of the asset classes. Before you get started, you’ll want to pay off your high-interest debt and have significant savings.
Choose a Strategy
Each of the strategies listed above can be successful. If you choose to buy REITs or funds, you can do online research about your options to help you get started. If you want to buy physical property, you’ll need to decide on a market.
Assemble a Team
You may want to work with an agent when you get started. Great agents will send you off-book opportunities that haven’t been listed yet. Eventually, you could need someone to manage your properties and an accountant to handle the financials. If you become successful, you may eventually need investors, too.
Do Deal Analysis
Whether you’re investing in residential or commercial real estate, you should do plenty of research on any investment. For example, with rental properties, you’ll need to analyze what future rent payments could be, what expenses you may be liable for, and forecast what you could sell the property for.
Close the Deal
The final step is pulling the trigger. Close on your property, or make the buy in your brokerage account.