Understand the basics of real estate investing

Investing in real estate is not an easy task and therefore has some inherent risks. However, compared to investing in almost anything else, real estate carries relatively little risk for the simple reason that you can control most elements of a real estate investment. For example, you have full control over where you invest (areas with measurable and consistently higher growth rates than other areas). When to buy, what to buy and through which lenders you get your financing. Similarly, you can control which tenants you lease your to regardless of whether or not you want to make improvements to the property, and when (if ever!) you want to sell (you don’t need to be certified in any way as a prerequisite to investing in real estate), and is easy to care for (hire a property manager)

Perhaps most importantly from an investment standpoint, it’s relatively easy to make a lot of money investing in real estate, a fact made all the more appealing by the reality that you don’t need to have a lot of capital to pull it off. To be sure, there are plenty of people making obscene amounts of money from stocks (consider Warren Buffet), currencies (George Soros), high-tech (Bill Gates), cars (Henry Ford), fashion (Ralph Lauren), and in a host of other other efforts. However, our argument is that if you take groups of 1000 people, all chosen at random, and train one group to invest in stocks, the next in cars, the next group in investing in currencies, the next in high technology, the next in cars, the next in fashion and so on and you also take a group of 1000 people and train them to invest in real estate then at the end of ten years real estate investors on average will have far outnumbered all the other investors

Not only will the average performance of real estate investors be much higher, but the standard deviation in performance will be much lower, meaning the numbers won’t be skewed by one or two hyper-success stories that raise the average but leave the masses to the wills of fate.

The few dangers that exist when it comes to investing in real estate are for the most part easy to overcome. That’s because by making smart decisions regarding real estate agents, property acquisitions, property management, bookkeeping, tenant selection, and general attitude, it’s easy to minimize your chances of making money on a scale few other investments can. they can afford.

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