Real Estate Investment for Beginners: What You Need To Know

Posted by Justin Havre on Thursday, May 2nd, 2019 at 9:04am.

All About Real Estate Investment for Property BuyersReal estate investment is an excellent way to diversify your portfolio, especially if you enjoy some managing and caring for a property. If you're thinking about getting your start in real estate, here's what you need to know about the different types of real estate investment and what's involved in being a landlord.

For informational purposes only. Always consult with an attorney, financial or tax advisor before proceeding with any real estate transaction.

Residential Rental Properties

Buying a home, even in a competative market, as a rental property is a common starting point for people just entering the world of real estate investment. Residential rental properties are a favorite for beginning investors because single family homes are a relatively affordable type of property, and the care and maintenance of a single family home is familiar to anyone who has owned a home in the past.

Single Family Rental Homes

Single family rental homes are properties that are typically rented to a single tenant or tenant group. Single family rental homes provide a dependable income if the tenant stays for a long time. Landlords can keep their tenants for longer if they take good care of the property and charge a reasonable rate.

Property owners who do not feel capable of performing their own maintenance can work with a management company to keep up with the property. Landlords who neglect the property or fail to respond to tenant problems in a timely manner may find it difficult to keep the property rented. This can result in financial losses.

Multi-family Homes

Multi-family apartments are typically more expensive to purchase than single family homes. For large buildings, it's common for landlords to contract with property management companies to take care of the property. Multi-family apartments can be an excellent investment because even if one tenant moves out, the remaining tenants will provide income while the landlord is trying to fill the vacancy.

Commercial Properties

Commercial properties are very different from residential properties. Often, commercial buildings are bigger and more expensive than single family residential properties. People who want to buy commercial property often seek partner investors to defray costs and make the initial purchase possible. Commercial properties can be divided into three different types.

Retail Buildings

Location makes a big difference in the success of a retail building, because the location will determine which customers are drawn to the business. Investors who want to get their start in retail building investment must first research the location. Questions to answer include:

  • Are there other businesses in the area that will help attract customers?
  • Is the economy in this area strong?
  • What will happen in this location if the economy takes a downturn?

Knowing the answers to these questions can help the investor decide which property is a good investment.

Industrial Buildings

Warehouses and factories can be very lucrative for the right investor. Different industrial sites will attract businesses of different types. An investor who wants to be successful should research the different types of industries who will be attracted to each site before making a purchase. The more they know about that type of industry, the more likely they are to be successful.

Commercial Office Space

In the right location, commercial office space can be very lucrative. Much like a multi-unit apartment building, a commercial building with many tenants will generally produce income even if one or two tenants moves out, as long as the rest of the tenants remain.

Questions to answer when trying to decide to purchase a commercial office space includes:

  • Will businesses be attracted to this location?
  • What kind of businesses will this office space attract?
  • What are the barriers that might prevent a business from renting in this location?

What's Involved in Being a Landlord?

Landlords have a duty and responsibility to their tenants. Property owners who take care of their property by performing regular maintenance will be able to attract better quality tenants. Therefore, there's a lot that goes into being a successful landlord.

Landlords must respond to tenant inquiries in a timely fashion, and perform regular inspections of the grounds to ensure that they're well maintained. Working with a good property maintenance company can help ensure that the property is kept in good condition. It's important to address cosmetic issues as well as structural issues, to keep properties rented. Property owners must work with a lawyer to craft a solid lease for tenants. They must also set rent appropriately to ensure that they can cover their expenses and make a profit.

How to Get Started

All in all, many people ease into real estate investment, going a little at a time. Starting small and working up into bigger investments is an excellent way to make a living as a real estate investor. Begin by buying a Heritage Hills new home to start a real estate portfolio.

People who are interested in becoming a real estate investor should start by contacting a good real estate agent. A good real estate professional can help a new investor decide which property is most viable, where to invest, and what properties pose the greatest risk.

For informational purposes only. Always consult with a financial advisor before proceeding with any real estate transaction.

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