You’ve probably heard of successful real estate investors, and maybe even thought that this is something only the wealthy can achieve. Well, you’ll be happy to know that just about anyone can invest in real estate and become successful from doing so. But what are some other reasons to invest in real estate, and how can you be successful in it?
Why Invest in Real Estate?
Build Your Wealth
Most investors choose to invest in real estate because they know that it builds wealth. You have two major options when it comes to real estate investing: holding on to the property as it appreciates and then selling it later, or renting it to tenants and earning money every month. It’s possible to have a successful career in real estate investing.
Earn Passive Income
The quickest way to make money with real estate is by investing in a property to rent on a monthly basis (rental property). This allows you to earn passive income or income that doesn’t require you to work as much as a traditional job would. Of course, there’s still some level of work required to run a successful rental property, but once all of the hard work is done, you’ll earn a steady stream of secondary income.
There Are Many Options
You can invest in residential properties (single-family homes, multi-family homes, vacation rentals, etc.), commercial properties (hotels, malls, office buildings, restaurants, etc.), industrial properties (factories, warehouses, etc.), or raw land. You can even invest in what’s called a REIT (real estate investment trust), which is similar to a mutual fund owned by a company that you can invest in and earn money from.
You also have options when it comes to financing a property. There are banks, loan companies, etc. that you can choose from if you can’t afford a property on your own— which the majority of people can’t.
Ways to Ensure Your Success
Choose Your Location Carefully
Of all of the real estate terminology, location is probably the most important one that will determine the success of a rental property. If your rental property isn’t located in a prime location (for the type of property that it is), you’re not likely to see a return on your investment. Vacation rentals are probably the easiest to determine a good location— you just need to look into popular tourist destinations that allow for short-term rentals. Commercial properties’ best locations are within a city that’s seeing population and job growth.
Residential properties are a little trickier when it comes to location. You’ll still want to look to a city experiencing population and job growth, but there are a few other factors you’ll want to consider:
- Good neighborhoods
- Location near good school districts
- Low crime rates
- Recreation and entertainment nearby
These are all things that tend to attract families, and families are more likely to rent long-term if a location has all or most of these attributes.
Learn to Market Your Property Effectively
Even if you have the most beautiful property in the best location, no one will know that they can rent it if you don’t market it. Fortunately, social media makes it easy to market just about anything, and all platforms have the ability to reach millions (billions, in the case of Facebook) or people. You can also post your listing on rental sites, with Airbnb being one of the most popular sites for posting short-term rentals.
Practice Being a Good Landlord
When you purchase a property and rent it to tenants, you are now the landlord. It’s important to build a reputation as a good landlord because this will make more people want to rent from you in the future. Bad news tends to get around faster than good news, so word will spread fast if you’re a difficult person to rent from. Make sure to have an open line of communication between you and your tenants and respond to all of their requests in a timely manner.
If acting as a landlord isn’t possible for you, you have the option to hire a property manager to do it for you. This is a common occurrence among many property owners, especially if they have multiple properties or properties located farther away from their primary residence.
Real estate is a great investment to look into, and you have the potential to become very successful. Just know that it does take a lot of work in the beginning, and there is still work to be done even after you’ve purchased your property. Still, this is a great investment if you decide that real estate is the right path for you.