Investors Are Different
We fully understand that investors think differently about real estate buying, selling, and leasing. The fact that you aren’t going to live in the property has a profound effect on how you look at it. We know—we got our licenses in order to learn and do more about real estate investing!
If you’re a seasoned investor and are ready to begin your search for the property that will fit your portfolio contact us today for an initial consultation. Since every investor and every portfolio is different, we’ll want to fully understand your goals, budget, and timeframe.
Some Basic Concepts
If you’re new to real estate investing, here are some basic ideas to lodge into your brain. Once you understand these ideas, you’ll begin to see them in every investment you consider.
Revenue: Every investment must generate income somehow.
The key is understanding how that revenue is generated. In real estate, rental income is the primary revenue generated. Whether it’s a multi-family property or a retail store, someone occupies that space and pays rent to do so.
Expenses: There are costs associated with every investment.
Investments don’t manage themselves. Also, real estate investments in particular don’t repair or maintain themelves -- someone has to do those things. Finally, real estate isn’t much good without utilities like heat, cooling, power, water, etc., and someone will have to pay the property taxes for the priviliege of owning the property. All of these costs, plus additional costs, are taken out of the revenue the investment generates.
Assets: Most investments own something.
If the investment doesn’t own something, you may not fully understand what you’re buying or the risks you’re taking. One of the reasons we like real estate as an investment is that it’s tangible: you can see and touch the asset that generates the revenue. You can also improve it, insure it against loss and damage, and watch the cash flow through your own property (talk about transparency!).
Liabilities: What you owe can hurt you.
Debt can be a good thing. Debt can help you buy a property and the revenue from that property will help to pay the debt back. Ideally, there’ll be some cash left over, after paying the expenses and the debt service, to put into your pocket. But, that’s the catch: the cash each month must, under all circumstances, be greater than the monthly payments on the debt. If it’s not, you could lose the property and all the money you put into it. So, we caution you to think carefully about any debt you choose to use and to fully understand the cash flow of any investment you consider.
What kind of investor are you?
There’s much, much more to learn about investing, but these ideas are a start. The other part of your investing start is: how do you like to invest? Are you a flipper or a buy-and-hold kind of person? Do you prefer one type of property or another? Why? The better you know your style, the better you can communicate that to us and the more we’ll be able to do for you.
|
