Real Estate Investing – An Alternative To Traditional Stock Market Investment

From a historical perspective, investing in real estate is almost as old as the construction of property itself. Indeed many business owners who created their wealth through companies then went on to diversify into real estate investments. In fact, over the years real estate investments have produced similar returns to those found in the stock market. Let’s take a look at some of the reasons:

First of all, and most obviously, the supply of building land around the world is limited, even when taking into account landfill opportunities. Since the world’s population is growing and the demand for housing ever increasing, then there would seem to be a never-ending and increasing requirement for real estate of all types.

Now let’s take a look at the mechanics of buying property. Here it can be seen that investing in real estate is quite different from most other traditional investments such as stocks. With real estate you can often borrow up to around 80 percent of the value of a property, sometimes even the full value and beyond under special circumstances. Thus a more modest investment of say 20 percent of the value can be used to buy and control the full value of the larger investment. Naturally, if the value of your investment increases, I.e. property prices rise, then the value of your real estate investment also increases. If so, then you are into profit, including that on the money you originally borrowed.

Naturally, there will be costs associated with real estate investing (such as legal fees and property maintenance, taxes, etc), but these are usually small in comparison with the potential gains.

Borrowing in order to invest in real estate makes real estate a type of leveraged investment. But if you know anything about leverage, you will realize that leveraged investments can also go against you. What, for example, if the property you purchased for $300,000 decreased in value to $240,000? Even though the value only dropped by 20 percent, you actually lose 100 percent of the original $60,000 investment. And if you have a mortgage on this property making up its full purchase price, you will actually need to pay money to the mortgage provider in order to cover the costs of selling the property. That’s in addition to the loss of the whole of your initial investment.

So, as you see, investing in real estate is something to be taken very seriously and should not be done with money which you might need for other things in the near future. Investment in property is more secure as a long-term investment. In the above example, if you could have held onto the property and not sold it, the loss would purely have been ‘on paper’. In all likelihood, over time the value of the property, unless grossly overpriced when you originally bought it, will rise and you will likely not only recover the full value of the initial investment, but also possibly make a nice profit when you do come to sell.

Another reason that real estate is a popular investment is that there are profits to be made from it whilst you are the owner. In addition to the tax-saving benefits (in that any tax due on the property’s increase in value doesn’t become due until it is eventually sold), you can also make additional money from renting out the property. This can often cover all your running costs of the property, plus providing a profit on top.

Unless you make a large down payment, early on during your ownership the monthly operating profit from your property business is likely to be small or non-existent. But over time this profit will increase as the amount of rent you can charge increases at a higher rate than the running costs. Naturally these profits will be subject to normal income tax rules.

A further benefit of investing in property is that you might be able to purchase cheaply a run-down or ‘distressed’ property and fix it up or develop it further. Properties like this can still be found if you look around carefully. Naturally, investing in this type of real estate can still produce large gains. This is something you certainly can’t do with traditional stock market investments.

However, returning to the initial question about whether real estate investing is still a viable option when current prices seem to be nearing their peak: yes, it can still be so, but you might need to be more creative and prepare to be in for the long haul. Property ‘flipping’ methods that worked extremely successfully yesterday, might not work at all well tomorrow.

You might also consider diversifying into overseas real estate markets. Whilst this will require greater study and analysis, and there are many more legal issues to consider, seeking out what appear to be undervalued international real estate opportunities has the potential to be highly profitable if handled correctly.

Naturally, you should always seek the advice of professionals, both financial and legal, before investing in properties of any description, particularly when considering investing overseas. There might be major implications to your overall taxation. Risks can also be substantially higher when you are not there to oversee your investment in person.

Most Real Estate Investors Realize They Need To Be Taking Real Estate Investing Courses

Many real investors who are starting – or looking to begin real estate investing – wonder whether they should take a real estate training course online, or try to find another way of learning about investing.

Often, it can be confusing to determine which courses you should take when you’re just getting started. Or whether you should take one at all.

Some real estate investors proudly declare themselves as self-taught, like we’ve seen in TV Shows as Property Ladder or Flip That House, while others have extensive training. This can be very frustrating as well. To add to the confusion, when you may have a limited budget. You may wish to invest more of your money into some investment property instead, and less of it in training.

To many, it’s tempting to put off taking real estate training courses until you get “some more cash in the wallet”.

But take heed.

Because although it can be a difficult call, there are some solid rules of thumb to follow.

First, you want to consider how much experience in real estate you already have and what sort of real estate investing you are interested in.

If you are interested in low-risk, long-term opportunities, you may read about “real estate investing” in books and courses. If you already have some real estate experience, you may wish to read up on a particular investment method and speak with other real estate investor’s, or research testimonials online from your computer before deciding to invest in a particular real estate training course.

However, if you wish to make large profits, you absolutely should invest in quality real-estate training courses in order to truly learn the ropes from someone who has been-there-done-that before.

“This is because great real-estate-investing training courses, unlike books and self-education, allow you to ask intelligent questions of your instructor, who should be a real estate investor professional himself or herself. “

This experience is invaluable, especially when you are structuring your first few deals.

If you combine your training courses with actual hands-on training, you will almost certainly be on the path to success. Even better, you will save the many years that most self-made real estate investors have spent on trial and error.

In many cases, quality real estate training courses can be a great investment, because they can save you tons of money and can actually point to new leads. In your real-estate training courses, you will likely be able to network with other people who are interested in real estate investing. You will often learn how to structure contracts and how to find excellent opportunities.

“This knowledge alone can help you pay for the cost of a course, since this knowledge will get you actually earning a profit.”

The key word in all of this, of course, is quality.

There’s no point in taking a particular real estate investing training course unless you are sure that the instructor or creator will provide you with quality skills and knowledge that you can actually apply to deals. When selecting real estate training courses, always look for the most comprehensive programs being taught by actual successful real estate investors.

In summary:

Stay away from courses taught by instructors with no practical hands-on experience.

Look for investing courses that are PROVEN, and perhaps go so far as to offer hands-on training (which may be an additional investment but can be well worth it because you will receive lots of personal interaction with the instructor) .

Compare as many programs as it takes to find one that is within your budget and offers you a quality education.

Make sure there are solid testimonials and endorsements from well-known and respected entrepreneurs

Even experienced investors will often invest in real estate training courses in order to polish up their skills and knowledge. New investors should learn as much as they can from books and from reading free resources and then should move on quickly to classes that can actually help them expand their knowledge and can help turn them into successful investors.

To Massive Profits.