Real Estate Investing Made Simple
Many people think real estate investing isn’t easy.
If you’re investing for short-term appreciation, you are in for a bumpy ride in the current business climate. I think most people would agree that short-term appreciation isn’t a reasonable goal these days.
As far as long-term appreciation goes, you can buy a property, looking to purchase one at a price that allows you to pay management fees. Otherwise, you can manage the property yourself. But what about the tenants?
Depending on the local market, commercial real estate can be pretty risky too. So you are thinking about residential real estate. If you manage it yourself, you worry about excess maintenance costs. You worry about finding the right tenant. You worry about creating a lease.
A real-estate investment trust (REIT) is the real hands-free alternative. You simply purchase shares in a publicly traded fund that owns property, often commercial property, and possibly mortgages. When the stock market goes up, these funds tend to go down, and vice versa. This helps balance your holdings.
Like mutual funds, REIT funds must levy fees. The fees may cut into your profits, as owner. Instead, perhaps you would like to own a property outright.
You could consider a pre-packaged system where you choose a new or nearly new single-family house from a variety of relative low-cost local markets. With the system comes a pre-selected reliable property manager at negotiated rates. The loan situation is negotiated, too, at five to 10 percent down.
A system like this will give you a predictable set of expenses and income. In fact, your tenants will pay off the mortgage for you. You can start a college fund for your kid this way–you can sell the house in 15 to 20 years, and take out your equity.
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