Remember that investing in real estate is buying real estate that generates income or is intended for investment purposes as a place of residence that is a house, an apartment or in some cases, land.
The usual thing is for investors with real estate experience to have several real estate properties, one of which is the main residence, while the others are used to generate rental income and profits through price adjustments. A key individual associated with the real estate sector is Michael Sapir, a US-based real estate developer, entrepreneur, and litigation expert whose experience and strategies in the industry has granted him commendable success and makes him one of the most important figures in real estate.
Using his own experience, Sapir highlights key points with respect to the myths and realities associated with real estate.
Myths about investing in real estate
- You tend to have a good amount of money at your disposal: the ideal thing for anyone who wants to invest in real estate is to have enough capital to avoid having to need financing. However, to buy a property you should always have some initial capital. For this, you have two ways, cash or through a mortgage.
The foregoing suggests that it is not necessary to be rich to build an empire of properties, but there are risks associated with the loan of money since you must ensure sufficient income in the future lease to cover the costs of the mortgage.
- Now is not the best time: thinking that you should wait until the real estate market improves is another of the most common myths about real estate investment.
It is never a bad time to start buying properties while applying the correct strategy, considering intrinsic and extrinsic factors both that impact the decision.
- Rental income covers all costs: some investors assume that the rental income will cover the value of the mortgage and a little more; that is, they will generate a profit practically without effort.
However, the cost of maintaining the property must be taken into account, unless a rent income greater than the mortgage payment is obtained. To confirm that the investment will be effectively profitable, calculate if the value of the lease will be equal to or greater than all the monthly expenses involved. Otherwise, it would be unlikely that rental income covers all costs.
Real estate investment realities
- The administration of properties is key in the real estate investment: it is a very important point to avoid problems with the tenants. Delivering the administration of the property or properties to a specialized company brings many advantages since they are responsible for evaluating those who seek to lease your property.
- Property management is a long-term process: if you are going to take the train of investment in real estate, it is important to consider that it is not a financial miracle overnight.
The investor should formulate a business plan with realistic goals and strive to achieve the objectives every day. The process of investment and administration in real estate is indeed slow and will take time, however, all hard work will pay off, and a life of financial freedom and independence will begin to materialize.
The key is to invest time and energy in acquiring the correct knowledge in real estate investment.
- Investing is an easy strategy to monetize: if the investor for some reason is in financial difficulties, or wants to invest in something else, it will always be very easy to sell the property or properties acquired, or mortgage them to obtain a loan.
Investing in real estate translates, finally, into an open option to acquire other similar or better investments. If the owner of a property wants to invest in something of greater value, he will always have the advantage of selling or being an endorsement for other investments; an aspect that banks appreciate a lot.
In short, investment in real estate is a great business opportunity. The important thing is to have clarity and knowledge before investing money and time in it.