Want to learn everything to know about real estate investing?
If you’re interested in becoming a real estate investor, and a successful one at that, then you should probably start by learning everything to know about real estate investing.
When I say “everything to know about real estate investing”, I am not referring to the actual details of each aspect, but the different aspects themselves.
There are several important aspects that anyone looking to invest in real estate should know about. Learning everything to know about real estate investing requires you to first know what these aspects are before delving deeper into learning about each separate aspect and the best practices surrounding it when investing in real estate.
So, I have broken down the list of everything to know about real estate investing into 5 individual aspects, and what it is that you need to learn about each aspect in order to make the best investment decisions and succeed as a real estate investor.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Everything to Know About Real Estate Investing – Appreciation
First and foremost, I want to tell you about appreciation.
Most people have heard the term “appreciation” in real estate, and probably have a basic idea of what it means for investing in real estate.
Appreciation is the increase in the value of a real estate property over time due to a number of different factors, such as the development and growth of the area or city, or the performance of the real estate market as a whole.
While many beginner investors believe that they can invest in real estate just for appreciation (through a buy-and-hold investment strategy), you need to realize that in real estate investing appreciation is just the icing on the cake.
Appreciation is very difficult to predict, so planning an investment around it can be a very risky move. Instead, when investing in real estate, leave appreciation out of the equation and plan for the profits that you can make without appreciation. If appreciation does happen, then you will be making extra profits, which can also be significant.
Do not, however, invest in real estate just for the appreciation. This is something that you should always keep in mind.
Related: 6 Things to Know About Real Estate Appreciation
Everything to Know About Real Estate Investing – Investment Strategies
One of the first things that you need to learn when it comes to everything to know about real estate investing is that there are several investment strategies that you can use.
The investment strategies that exist in the real estate market are numerous and very different from one another.
There are traditional investment strategies that have existed since the dawn of real estate investing, such as the traditional rental strategy or the fix-and-flip strategy.
There are also some more modern and creative (unconventional) real estate investment strategies that you can also use, such as the lease option or rent-to-own strategy.
It is important for you to learn about the different investment strategies in order to find the one that is most suitable for you and that you can use to make the profits that you are hoping for in the amount of time that you desire.
Related: Top Six Real Estate Investment Strategies
Everything to Know About Real Estate Investing – The Math
Another important aspect of real estate investing is learning the math.
By that, I am referring to the different metrics that are used for analyzing an investment opportunity or investment property to determine its viability and projected profitability, and how to calculate these metrics and what they mean.
You’re probably familiar with the term return on investment (ROI). What you might not be aware of, however, is that in real estate investing, there are multiple methods for calculating the ROI, with each method having its own unique uses and advantages depending on the investment strategy that you use or the type of property that you’re investing in.
Some of the most common metrics used in real estate investing are the cap rate and the cash on cash return, for example. Both of these metrics are used to calculate the ROI using different information about the property or your investment preferences.
You can find simple-to-understand guides on the internet that can help you learn about the different metrics, their uses, and how to calculate them.
Related: Understanding Cap Rate vs. Cash on Cash Return
Everything to Know About Real Estate Investing – Laws and Taxes
Both laws and taxes have a major role in real estate investing, and they will dictate all aspects of your investment.
Additionally, one of the highest risks of investing in real estate is the lack of education or knowledge of the laws and taxes that affect your investment. In many cases, not knowing the laws or the taxes that will apply to your investment can lead to serious complications that can result in you losing money on your investment, or in a worse scenario losing your property altogether.
The best way for you to make sure you’re aware of all laws and taxes that might affect your investment is to seek the advice of a legal advisor as well as a financial or tax expert to help you plan your investment accordingly.
Related: How the 2018 Tax Reform Affects Real Estate Investors
Everything to Know About Real Estate Investing – Financing
Lastly, you probably know that investing in real estate requires large sums of money in order to purchase a property, maintain it, conduct repairs and renovations, etc.
You might’ve wondered how everyone seems to magically have the required amount of money to purchase a property or invest in real estate.
However, most people who invest in real estate will often not use their own money for purchasing a property but will borrow the money from a lender instead.
Once you come to the point where you’re looking for a way to finance your purchase, you should be aware of the options that are available to you in order to finance your investment and purchase the property.
There are multiple types of loans and mortgages that are available to real estate investors, each having its own advantages and disadvantages, with some being designed for specific types of properties or investment strategies.
Related: Buying an Investment Property: Cash or Mortgage?
Knowing what your options are will allow you to better plan for your investment and all aspects related to it with a minimal amount of risk, and it will also help you learn more about the potential profits that you can make from investing in a property.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Bottom Line
Real estate investing has much more to it than just purchasing a property and waiting for it to appreciate.
Everything to know about real estate investing must be learned before you even consider investing. After learning more about each aspect, take your time to come up with the perfect investment plan, and make each step of the way with caution if you want to avoid losing money on your investment.
Finally, make sure to familiarize yourself with the tools and services that are available to you as a real estate investor in order to help you maximize your profits and reduce the amount of time and effort needed to carry out your investments.
Mashvisor, for example, can help you search for investment properties using several unique filters and features, and it will provide you with real estate analytics that will help you know how much money you will make from investing in a property and the best investment strategy to use for investing in it.