Real Estate Investing FAQs and How-to’s
Investing in real estate can seem daunting to someone who’s decided to enter the world of real estate. This guide is meant to calm your fears and hopefully make investing in real estate a simple and easy process. This guide will go over many of the basics in real estate investing and discuss some of the more important topics every investor should know.
Investing in real estate can seem daunting to someone who’s decided to enter the world of real estate. This guide is meant to calm your fears and hopefully make investing in real estate a simple and easy process. This guide will go over many of the basics in real estate investing and discuss some of the more important topics every investor should know.
Remember!
Before detailing the finer parts of real estate, it is important to be aware that title is often taken as an LLC. These are set up to prevent liability and legal pitfalls. An LLC is a special legal structure known as a Limited Liability Company. You can also use a different LLC for each real estate investment you own.
Before detailing the finer parts of real estate, it is important to be aware that title is often taken as an LLC. These are set up to prevent liability and legal pitfalls. An LLC is a special legal structure known as a Limited Liability Company. You can also use a different LLC for each real estate investment you own.
Type of Real Estate Investments
Before choosing to invest in real estate, it is important that you understand what kinds of real estate investments exist and determine which one is better suited to you.
- Residential real estate investments: Properties such as houses and apartment buildings. Residents pay you to live in the property and their length of stay is based upon a rental or lease agreement. This is generally considered the safest investment because people need somewhere to live.
- Office investments: All workplace investments.
- Industrial real estate investments: Storage units, car washes or any other special purpose real estate that generates sales from customers. This type of real estate often has significant “fee” and “service” revenue streams (eg. Adding coin operated vacuum cleaners at a car wash). Also warehouse and distribution.
- Retail real estate investments: These include shopping malls or any other retail storefronts. In some cases, the landlord receives a percentage of sales from each tenant store plus a base rent.
- Mixed-use real estate investments: These investments combine any of the above. This type of an investment is especially popular for those with significant assets because of the built-in diversification, which is important in controlling risk.
- NNN Investments or Triple Net Investments: These are now very popular. These include Walgreens, Walmart, Dollar General Stores where the tenant pays the lease rent plus taxes, insurance, and expenses. This describes a very simple form of investment.
- Real Estate Investment Trusts or REITs: These investment trusts trade similar to stocks. You can own a portfolio of underlying real estate or real estate mortgages.
How to Make Money in Real Estate
For beginning investors, it’s a valid question. “How do I make money investing in real estate?” Well there are basically three ways an investor can make money.
- Real Estate Appreciation: Simply put, this is when the property you own becomes more valuable due to some change in the real estate market.
- Cash Flow Income: In this case, this investment involves buying real estate property and operating it so you collect a stream of cash from rent.
- Ancillary Real Estate Investment Income: This includes things like vending machines in office buildings or laundry facilities in apartment. These are basically like mini-businesses within your real estate investment which allow you to earn extra income.
For further questions please don’t hesitate to contact Tony Brettkelly at 650-218-1995
What types of investments are best?
When determining the value of an investment property, there are four factors you must consider:
- Location and quality of asset
- Quality of loan
- Cash flow produced
- Appreciation produced
A balance is usually reached between these four factors based on short term and long term goals. We help you determine your focus and define your investments accordingly.
I’ve decided I want to invest in real estate. What’s next?
- Pre-qualify: your offer is much stronger when the seller knows your financing is set and ready to go.
- Choose your investment: seek advice from experts if needed
- Make an offer: if purchasing in a development, pricing may be set, but if you are purchasing a single family home, there may be some room to bargain
- Purchase Agreement: the name of the contract you and the seller will sign. It will outline specific agreements such as:
- Amount of deposit
- Price and terms of the agreement
- Escrow and due diligence
- Intended closing time agreed upon
- Closing: on this date the purchase of the property will be finalized and you officially take title of the property.
- Post Close: we assist in managing and maintaining your asset. We help in creating maximum value by highly efficient management, lowest cost financing and aggressive disposition
Once I purchase a place, how do I get people to rent it?
Simply put, you need to get your property ready, have it listed in local advertising, get a good lease to use in your state, and follow up with every inquiry. Alternatively we can assist in the management and leasing of your property.
Simply put, you need to get your property ready, have it listed in local advertising, get a good lease to use in your state, and follow up with every inquiry. Alternatively we can assist in the management and leasing of your property.
Should I invest in my state or out-of-state?
Some markets are appreciating better than others and some markets have more cash flows. We can help you research and determine what works best for you. Generally the golden rule is the closer to home the better; however, with certain investments where management is taken care of like NNN investments, it makes sense to invest further away.
