Real Estate Investing: A Complete, But Concise, Guide

Wednesday, April 12, 2017 Guest Writer

If you are interested in real estate investing, no doubt you’ve already figured out that it encompasses several areas.

Fundamentally, real estate refers to a property and the buildings on it.

But, when it comes to investing, it gets a little deeper than that e.g. options can range anywhere from REITS (real estate investment trusts) to personally owned residential properties.

To help you gain a basic understanding of this sometimes complex industry, today we aim to answer 3 major questions:

● What potential benefits does real estate investing offer?

● How does one go about investing in real estate?

● What opportunities are currently available on the market?

Potential Pros of Real Estate Investing

There are many benefits to be had with real estate investing:

● Diversification: Real estate, especially private REITs, are a great way to round out any portfolio due to their low correlation with stocks and bonds.

● Inflation protection: Property values typically rise with inflation, as a result, many rental leases have built-in inflation clauses

● Attractive returns: Real estate investment combines current income with potential capital appreciation

Real Estate Investment Methods

When it comes down to the actual investing part, you have three basic options:

● Private real estate funds: Typically when a group of private investors combine their assets and invest directly into properties.

● Direct real estate investment: Buying a property and turning it into a rental property

● REIT: This includes both the regular exchange-traded REITs and the private REITs not traded on the exchange

Current Market Opportunities for Investing in Real Estate

Before we delve deeper into this subject, an important distinction must be made:

● Commercial real estate: Commercial property management refers to properties that generate income like apartments, hotels, warehouses, office, and retail buildings.

● Residential real estate: Refers to residential lots and dwellings, like single-family condominiums and homes, generally owned for personal use.

Now, that’s out of the way, it’s important to note that commercial real estate opportunities are strongest in what are considered to be the secondary markets of the US i.e. Las Vegas, Tampa, Phoenix, and Albany.

Opportunities are abundant in these areas because the primary markets i.e. Washington, San Francisco, Boston, Chicago, and Los Angeles, are doing really well right now. So well, in fact, they are back to the level they were at before the days of the financial crisis despite new and harsher regulations.

The secondary markets, on the other hand, aren’t fully recovered – which means these areas are ripe for the picking.

But, if interested investors don’t act fast, the valuation gap between the two markets will continue to get smaller.

When it comes to residential real estate, industry experts believe there are many opportunities in this area as well.

This in the wake of reports that say that both new homes and home ownership rates are at their lowest levels in decades.

This is the place when you should be extra careful to check if the property has any serious damage like fundament damage or requires huge water damage repairment.

Conclusion

Real estate investing is very appealing and can be very profitable, just be careful and smart in your investment choices.

About the Author

Southern Nevada’s premier brokerage and property management firm, Real Estate Asset Management (RAM) is led by Principal and Broker Jeff Susa. With more than 37 years of commercial real estate experience in Southern Nevada and California, Susa is joined at RAM by an elite team of agents and industry professionals. Together, the RAM team brings more than 125 years of combined experience in real estate sales, development, leasing and property management to the company’s everyday operations.

RAM’s team of experienced professionals are committed to creating personalized relationships with clients. The RAM team approaches each project with the goal of maximizing profits while focusing on the smallest of details with the utmost care.

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