Real Estate InvestingReal estate investing is frequently shown on those late night TV ads. We've all seen it on TV - "Get rich quick by investing in real estate!", "John Doe made this much money in 2 months!" and so on.
By the end of the commercials, we are left wondering hey, if they can do it, why can't we? Is it really that easy to get rich in real estate?
Is it possible to achieve financial success in real estate? The answer is yes. Is it easy? No. There is no magic potion for financial success, despite what the TV commercials may imply.
Most successful real estate investors will tell you that it all started with a vision, lots of determination and motivation, endless planning and researching and most importantly, taking action.
What makes investing in real estate so attractive?
Well, the basic 4 benefits of investing in real estate are:
1. Cash Flow
Cash flow is the amount of money left after all the operating expenses (property taxes, insurance, repairs, maintenance, etc.) and mortgage payments have been made. Ideally, you'd want a Positive Cash Flow.
2. Loan Amortization
A portion of each mortgage payment is applied first towards the interest charged by the lender and the rest is applied towards reducing the balance of the loan. Thus with each mortgage payment, the loan balance or principal is reduced and the equity increased.
3. Tax savings
Real estate investing also offers some tax advantages generally not found in other investments. The tax laws allow real estate investors to deduct many operating expenses, depreciation and even defer capital gains.
Appreciation is the increase in value of a property. Many homeowners have seen their wealth increase due to property appreciation. Another characteristic of investing in real estate is the ability to use leverage.
Leverage is sometimes referred to as using "Other People's Money". Leverage enables many real estate investors to grow their wealth quickly.
Real estate investing is not rocket science. Most average person can invest in real estate and achieve financial success. BUT it does take work.
First, take the time to understand the buying process and the general real estate investment terms and concepts.
Read all the real estate books and articles that you can find. Learn how to research the local real estate market and demographics, perform rent surveys and find financing options.
Research property managers in the area and interview them.
Most investors fail when they neglect to do their due diligence! Finally, all the time and energy invested will not amount to anything if you don't take action.
Fear of losing money is generally what stops people from taking action or investing in real estate but remember this: it is also this lack of action that is preventing them from making money. It is up to you.
Real estate investing is a great way to build your wealth and it has been proven time and time again. So yes, if they can do it, so can you!