There’s a good reason why people consider real estate as a good hedge against inflation. Though inflation rates are currently at 8%, the S&P CoreLogic Case-Shiller US National Home Price Index reports that home prices rose by 20.6% from the year before. The rates are even higher in key areas like Miami, which saw a 32% increase, and Tampa, which rose by 34.8% since last year.
With proper investment, you can take advantage of these rising prices and earn substantial returns. Below, we’ll tackle what you need to know about real estate investments as a beginner:
Real Estate as an Investment Asset
Real estate properties are one of the most popular investment products, and this is due to their stability as an asset. The Balance explains that profit from these products usually stems from the appreciation of their value, cash flow income from rental operations, commissions from sales, or even profits from ancillary investments. These income sources are less risky and volatile than the stock market, but the catch is that these products require a lot of capital and the returns will often come after many years. There are many ways to protect your assets and build your profit from these investments, though, which is why it’s recommended that you learn the proper steps before you start investing in real estate.
How Can You Get Started with Real Estate Investments
Conduct research on real estate investment strategies
There’s no one-size-fits-all approach when it comes to real estate investments. Financial author Giovanni Rigters even emphasizes in Real Estate Investing for Beginners that the industry requires a lot of work because the competition is very fierce. In fact, you’ll need to get all the information that you can get from books and the internet to ensure that you can invest in profitable properties and get ahead of your competition in the industry. The research will pay off once you identify opportunities and investment strategies appropriate for the different assets available on the market.
Assess and build your investment budget
There are different asset types and strategies that are available for every budget. If you want to flip a house or build a rental property, real estate agent Suzi Farajiani recommends meeting with a lender that can help you assess your financial readiness for purchasing a home. You may need to save up a lot to lower your monthly costs, remove the mortgage insurance requirement, and afford the out-of-pocket expenses. Otherwise, you can stick to a lower budget by investing in real estate investment groups (REIGs), real estate investment trusts (REITs), or real estate crowdfunding.
Learn how to deal with investment setbacks
Investments come with risks, so you’ll also have to prepare for worst-case scenarios. You can start preparing for these setbacks by reading Developing: My Life, which is written by real-estate developer William Zeckendorf Jr. The real estate mogul managed developments in New York and Santa Fe, but he also experienced losses when the stock market crashed. As Zeckendorf learned from the mistakes of his father, you can also improve your judgement in real estate developments and rise up from investment setbacks by learning from the mogul's errors. Real estate investments can generate lots of profit, especially if you know how and where you should invest your capital. You'll need to learn the basics and assess the mistakes of experts to ensure that you garner returns from your investment.
Article written by Roseanne Jessie
Comments