Real Estate Investing: How Do I Do It?


Real estate investing can be lucrative, but it’s a tricky business. Not only are there the usual challenges to a successful investment, but it’s important to match your strategy with your financial resources, risk appetite and how hands-on you want to be.

A growing number of investors are turning to real estate as a way to diversify their portfolios. It’s a relatively stable asset that tends to retain value during economic downturns, though it’s not without its risks. If you’re thinking of investing in real estate, be sure to research the market thoroughly and make a realistic assessment of your risk tolerance.

In addition to evaluating the potential for property value appreciation, you should also consider the local rental market. The availability of good tenants can have a significant impact on your profitability. And if you’re buying a rental property, don’t forget to factor in mortgage insurance, property taxes and maintenance costs into your monthly expenses.

You can invest in real estate with a variety of different strategies, from becoming a landlord to flipping houses. Some of these options require more operational expertise than others, but they can offer higher returns than other forms of real estate investment. However, personal finance expert Dave Ramsey cautions that being a landlord isn’t as passive as it sounds: fielding calls from grumpy renters or dealing with property damage may not be your idea of an ideal career. Click here

Another popular option is to purchase properties through a real estate investment trust (REIT). REITs are publicly-traded equity funds that invest in residential and commercial properties, and they’re a great option for investors who want to diversify their portfolios without getting involved in the day-to-day management of individual properties. REITs have lower upfront investment requirements than direct ownership of property, but they still come with some level of volatility and illiquidity.

If you want to get involved in larger-scale residential rentals, you’ll typically have to partner with other investors or join a real estate investor group. The best groups have little debt, plenty of cash cushion for upkeep and clearly defined goals for the future. They should also be able to explain their investment philosophy and how they’ll manage the properties.

Investing in real estate can be a great way to build wealth, increase your cash flow and prepare for an emergency situation. Just remember that it’s a risky investment, and you should be prepared to lose some of your money if things don’t go well. If you’re ready to take the plunge, start by determining your strategy and lining up your investing capital. Then, get in your car and start looking for deals! With a little bit of patience, you’ll soon be reaping the benefits of your hard work. Good luck!