It can seem a little overwhelming when you’re getting Started with Real Estate Investment. There is obviously much to learn, and more than a few pitfalls, but if you can weather the storm, there are also great opportunities to build considerable personal wealth. There are two main ways to go about investing in real estate: being a passive investor or an active one. A passive investor purchases a property, then lets it build up value before selling it and realizing a profit.
An active investor will actually manage the property while it’s being rented, or will hire rental property management in San Diego to do that for them. If you’re not at all familiar with renting and landlord laws, you’d be better off using professional rental property management.
Kinds of real estate investments
There are quite a few different types of real estate investments you could make to start out, including the following:
- Land – this is the original type of investment, but you generally won’t receive a quick turnover with this kind of investment. It’s more of a long-term investment that eventually yields a profit.
- House flipping – this is a much faster way to realize a profit on any property, but it could also involve considerable clean-up and improvement work, before the property can be sold.
- Vacation home – this is a great way for you to make personal use of a property when your family is on vacation. Then when you’re back at home, you can rent out the place to other vacationers throughout the year.
- Rental property – probably the most popular form of real estate investment, this actually takes in a number of different situations. For instance, you might rent out a single-family dwelling, multi-family dwellings, industrial buildings, commercial properties, and mixed use properties.
- Real estate stocks – rather than investing as a hands-on investor, you could simply purchase real estate stocks. This has come to be a very popular option, with the rise of such online platforms as Lending Club and Prosper.
Do you intend to become a landlord?
One of the biggest questions you’ll face with real estate investment is whether or not you intend to become a landlord. If rental properties are your thing, this issue will certainly present itself at some point. When it does, you should have your answer ready so you don’t have to agonize over it. By becoming an active landlord or property manager, you are making a big time commitment, because tenants may need you at any hour of the day.
If you decide that you don’t have that kind of time available, you can always hire a property manager to act on your behalf. Of course, this individual will have to be someone you trust implicitly, and whom you have a great rapport with. There are a number of tenants’ rights which you’ll have to observe, and there are a great many responsibilities which are attached to being a property manager. Give this question some serious consideration before you start investing in rental properties.