Investing in real estate is a lucrative and profitable business venture that almost anyone can take on. However, to get started in this industry, it’s best to have some background knowledge before making investments. Are you thinking about the benefits of expanding your investment portfolio? Stick around while we go over some real estate investment facts that you should know before diving in.
Can Anyone Invest in Real Estate?
When you first hear about the successes of real estate investors, you may think that you could never be in that position. However, that’s not true! Anyone can invest in real estate if they have enough capital, time, and patience. Now, it’s easier said than done, but one of the most complex parts is coming up with the money you need to kick off your investment.
Then, investors must understand that the work isn’t over once you buy a rental property. Before you can start seeing significant returns on your investment, you need to make sure it’s livable, safe, and up-to-date. Additionally, landlords need to find tenants to live there, regularly inspect the property, ensure all utilities are working, and much more.
It can quickly turn into a full-time job if you don’t hire property management. A trusted property management company in Northern Virginia, like PPM, can help you with the day-to-day tasks of your rental property. Outsourcing tasks and hiring help from property managers, contractors, and other employees is essential in running a smooth rental business.
If you want to learn more ways to succeed in real estate, check out our blog!
8 Real Estate Investment Facts Investors Should Know
Have you been thinking about getting into real estate, but you don’t know the first thing about it? Don’t worry–you’re not alone! Luckily, we’ve compiled a list of some of the basic yet interesting real estate investment facts for you to keep in mind.
- Investing in Real Estate Can Protect Against Inflation
- Real Estate Investing Poses Tax Benefits
- Your Investment Location is Crucial
- Real Estate Investments Typically Fund Themselves
- You Can Fund Your Retirement With Real Estate Investments
- You Can Use Creative Ways to Finance Your Investment
- Real Estate Investing Gives You a Lot of Control
- “Staged Homes” Catch More Eyes Than Un-staged Homes
Investing in Real Estate Can Protect Against Inflation
Inflation is highly prevalent these days. Do you ever wonder how to combat it or protect yourself from it? Well, investing in real estate is one of the best protection against inflation. During periods of inflation, many assets tend to flop while real estate flourishes.
The reasoning behind it isn’t too complicated. As inflation rates rise, the value of your property also rises, along with the rental income you generate. So, during periods of inflation, rental business owners typically have a chance to create greater profits.
Real Estate Investing Poses Tax Benefits
The plentiful tax benefits of real estate investing are a huge reason it’s so desirable. For example, you can deduct various expenses such as appreciation, mortgage interest, maintenance costs, and more.
Additionally, there are benefits like lower capital gains taxes, depreciation, refinancing, and 1031 Exchanges when you want to sell your property. That said, it’s essential to connect with a tax specialist or financial advisor while filing taxes to make sure you qualify for certain tax benefits.
Your Investment Location is Crucial
Where you decide to purchase property is a huge factor in your rental property’s success. After all, it’s important to buy a rental property in areas where people are going to want to live. The key is to find properties and areas that will attract high-quality tenants.
When you have real estate in more desirable neighborhoods, you’re likely to have tenants who will take good care of your property. Therefore, before you buy a rental home, do thorough research on the area and overall location of the property. Look at the average rental rates, crime rates, local attractions, public transportation, amenities etc.
Real Estate Investments Typically Fund Themselves
Though it may seem like a no-brainer, since the goal of rental investing is to make a profit, your investments can typically fund themselves. Therefore, if and when you take out a loan to secure a property, the income you generate from your rental business should pay it off quickly.
That said, investing in real estate is a great way to build your wealth and equity while paying off your debt at the same time. Many investors think of it like this– When your rental is occupied and tenants pay rent each month, they are essentially paying off your mortgage, taxes, and other housing expenses.
You Can Fund Your Retirement With Real Estate Investments
One of the most underrated real estate investment facts is that you can actually fund your retirement with your rental business. Though it may not surprise well-established investors, those who want to explore a sustainable way to fund your retirement consider investing in real estate.
It’s crucial to keep in mind that investing initially takes a lot of time, patience, and money. Once you have your investments established, though, you can make a decent amount of money in a short amount of time. Then, as long as you keep up with your investment, you can generate a steady cash flow and put some away for retirement.
You Can Use Creative Ways to Finance Your Investment
You may think that the only way to invest in real estate is to buy outright with cash or take out a mortgage loan. However, there are more ways you can finance your investment. For example, you can seek out the following options:
- Obtain a private loan from a self-directed IRA
- Use seller financing
- Hard money loans
- Rent to own
- Master lease agreement
Real Estate Investing Gives You a Lot of Control
When you purchase a property, you essentially have control over every aspect. After all, you choose the location where you invest, agree with the acquisition price, and choose the tenants who occupy your property.
Additionally, with almost every step along the way, rental property owners control who works on the property, how the property looks, and even monthly rental rates. As a result, real estate investing is a unique business where investors have a lot of control.
“Staged Homes” Catch More Eyes Than Un-staged Homes
Although staged homes seem like a given, they are more desirable to prospective tenants or homebuyers than un-staged homes. This is important for rental business owners to note. After all, if you have an empty rental and you’re looking for high-quality tenants, consider staging the home.
When you stage a rental property, it’s crucial to eliminate distractions and emphasize the unique features of the rental unit. For example, when staging a home, avoid bold, busy colors and focus more on neutral, welcoming styles. The goal is to highlight the space’s potential so that prospects can better envision themselves living in the home.
Can Property Management Improve Your Investment?
One of the most apparent real estate investment facts is that property management is necessary for busy landlords. Luckily, the qualified experts at Professional Property Management of Northern Virginia are here to help.
Whether you need help with marketing and leasing your property, or managing your rental, we can help your business succeed. If you are interested in learning more, don’t hesitate to contact PPM today if you are in need of property management services in Northern Virginia.