Real Estate Innovation

Real Estate Investing Made Simple

Real estate investing may be a lot of things, but it isn’t easy. At least that’s what a lot of people think.

Buying a property and hoping to re-sell it quickly at a gain isn’t a workable scenario in the current business climate.

If you’re looking for long-term appreciation, you need to purchase a property at a price that allows room to pay management fees. Or you can manage the property. Here’s what’s hard to predict: the tenants.

Depending on the local market, commercial real estate can be pretty risky too. So you are thinking about residential real estate. If you manage it yourself, you worry about excess maintenance costs. You worry about finding the right tenant. You worry about creating a lease.

You may want to consider a real-estate investment trust (REIT), if you want an investment that is low-maintenance. You buy shares in a REIT fund, which is publicly traded. The fund typically holds commercial property and/or mortgages. The value of these funds may go up when the stock market goes down, allowing you to hedge your bets.

Like mutual funds, REIT funds must levy fees. The fees may cut into your profits, as owner. Instead, perhaps you would like to own a property outright.

What do you think of the idea of investing your money in a single-family house, to be rented out? You can choose the house from a variety of local sunbelt markets, and you can take advantage of negotiated relationships with property managers, insurers, and mortgage originators. All this at just five to 10 percent down on each house.

Using such a system, You can set up an investment with known costs, and then let the tenants pay off the mortgage for you. It’s a great way to start a college fund for your young child. All you will have to do is sell the house in 15 years and extract the equity.