How to Start Real Estate Investing

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Investing in real estate can be a path to financial freedom. With hard work, research and patience, it is possible to learn how to start real estate investing.

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Find Your Niche : Real estate is a very broad field, with hundreds of ways to make money. As a beginning investor, choose your real estate specialty so that you can focus on it, find out all you can about it and then make your financial decisions based on what you discovered. 

Here are some choices to consider:

Raw Land:
• Can be rented out for industrial use
• Can be held until the value goes up due to nearby development

Single-Family Homes : 

• Don’t often produce positive cash flow, because rent typically covers only the mortgage and expenses
• Can appreciate in value

Duplex/Triplex/Quads: 

• Hold more than one tenant
• Can produce more rent than a single-family home

Small Apartments : 

• Up to fifty tenants
• Can provide positive cash flow

Large Apartments: 

• More than fifty tenants
• Often bought by large corporations

Real Estate Investment Trusts (REITs) : 

• Available through an online broker.
• Pay interest
• May accrue in value

Commercial Buildings : 

• Focused on renting to businesses
• Range from “Mom and Pop” spaces to “Big Box” stores

Tax Liens : 

• You pay off someone else’s property taxes
• Receive better interest than the bank pays

Choose Your Strategy:  The next step is choosing your strategy. Know your financial goals before you choose properties and evaluate deals.

The following are some strategies:

Buy and Hold: This is for the patient investor who has time to wait for the property to rise in value.  

Flipping : This means buying a fixer-upper and renovating, then selling, usually in under a year. 

Wholesaling: Wholesalers find deals, get the property under contract, then sell the contract to someone else. 

Cash Flow Investing: You buy a property cheaply enough to have income from the rents. Your focus is on income rather than on appreciation.

Decide on Selection Criteria: A smart way to find the investment property is by listing selection criteria.
The following are examples:

• Town
• Neighborhood
• Property size
• Lot size
• Property condition
• Number of units
• Cash flow
• Appreciation potential

Where to Find Real Estate : The first thought that comes to mind is a “for sale” sign on the front lawn. However, there are ways to find investment properties besides driving around.

The following are a few examples:
• Local investment clubs
• Online networking sites
• Classified ads
• Real estate brokers
• Foreclosure notices in the paper

Financing: One of the most important factors is how you plan to pay for real estate.

The following are examples of how you can finance:

A conventional mortgage requires you to live on the property. A bank uses its own cash for portfolio loans, and the qualifying process can be easier for this type of loan versus a conventional mortgage. Federal Housing Administration (FHA) Loans are federally-funded and require very low down payments, but you’re also required to live in the home you invest in.  203k Loans are also federally-funded loans that allow you to purchase a house that needs a lot of repair and finance the repairs right into the loan itself.  HomePath Mortgages are for repossessed homes you can finance and buy from the government. You don’t have to live in the home. Seller-Financed loans allow you to make payments directly to the seller.  Hard money and private money comes from individuals who want to invest. They don’t check your credit as much as they check the cash flow the property can bring. With home equity loans and lines of credit, you can borrow against your own home or use bank credit to raise cash for an investment. In an investment partnership, a partner can contribute money in exchange for a percentage of the income and profits. Commercial loans are made by banks and financial institutions on office properties, and are mostly for experienced investors.

For further advice on real-estate investing and financial freedom, see the website of Marie France Dayan, entrepreneur and life/ business coach, and connect with her on social media.

Find Marie France Dayan on Facebook, LinkedIn and Pinterest as Marie-France Dayan and look for her website and blog, The Zen Coach: http://fasttrackyourlife.com/. Marie’s Twitter handle: @mfdayan

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