If you take the time to learn the ropes of your local markets, real estate investment can be one of the most lucrative career paths available—and a way to build long-term wealth. This probably isn’t the first time you’ve heard a claim like this. Real estate professionals and amateurs alike frequently suggest that investments in this field are some of the best financial choices you can make. But are they as good as they’re made out to be, and if so, how can you take advantage of them?
Barriers to Entry
First, let’s talk about how easy it is to get started in real estate investing. While it’s not a good idea to start making major financial decisions with no knowledge of the subject at hand, it doesn’t take long to gain enough sense for real estate that you can start taking advantage of opportunities. All homeowners are implicitly involved in this investing, even if they don’t see it as such, and in just a few years of studying and practice, you can become a practical expert.
According to RealEstateU, it’s also ridiculously easy to get a full-fledged real estate license. Depending on where you live, you’ll like need to engage in a few dozen hours of coursework, then take a test to get your license. Once you have it, you’ll be able to broker deals on your own.
The Perks of Real Estate Investing
There are a few advantages that this type of investing has over other types of investments:
- Real (and finite) assets. First, real estate is “real.” When you invest in a company by purchasing shares of stock, you’re often purchasing something digital that reflects ownership in a company, which is somewhat abstract. A house, by contrast is firmly established in the real world, and doesn’t necessarily rely on an online platform for trading. On top of that, real estate assets tend to be finite; there’s only a fixed amount of land available in each city and in each neighborhood, so there’s a degree of scarcity in play.
- Historical returns. Real estate markets, overall, have had a long and stable history of growth. If you bought a house in a decent neighborhood at almost any time in the past century, you could rest assured that your property value would increase over the years. Obviously, there are some exceptions to this; some neighborhoods go into decline, with property values falling, and rarely, there’s an economic situation that results in a down market all over the country. However, compared to most other assets, real estate is stable and reliable.
- Strategic flexibility. There are many different ways to invest in this field. You could buy a house that’s in bad shape, spend the time and money to fix it up, and flip it for a profit. You could buy a house in an up-and-coming neighborhood for a relatively low amount of money, sit on it for many years, and sell it later for a profit. Or you could buy an attractive house and rent it out to tenants, earning your profit in the form of monthly rental income. You could even mix and match these strategies to suit your needs.
- Types of real estate available. It’s also worth noting that there are many different types available. You could invest in residential houses, single family rentals, multifamily rentals, or you could invest in commercial real estate, or hotels. Many investors eventually build a portfolio of many different property types.
How to Get Started
Are you interested in getting involved in real estate investing? There are a few important steps to take before you get involved. First, gather more knowledge. There are plenty of online resources dedicated to teaching you the fundamentals of this type of investing, and if you’re interested in getting your own license, you can take formal classes to learn the basics. Otherwise, find a mentor to work with. There are likely real estate investing meetups in your area; go to one and start talking to people. Eventually, you’ll find someone who knows what they’re talking about, and they might be willing to take you along for the ride and teach you what they know. At some point, you’ll make your first investment, you’ll learn a lot from it, and you’ll be able to decide how you want to proceed from there.
This type of investing isn’t for everyone, but it stands as one of the most flexible and efficient ways to build wealth and expand your financial future. Make sure you know what you’re getting into before spending your own money, and be prepared to make lots of errors (and hopefully, learn from them).