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Real Estate Investing Made Simple |
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by PhyllisWheeler
Many people think real estate investing isn't easy.
Investing for short-term appreciation isn't a good idea these days. If you buy property and hope for quick gains, you're likely to be disappointed.
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?
In commercial real estate, you run the risk of not having any tenants, if the local market is glutted. And that is the case in many local markets. In residential real estate, you may find yourself doing a fair amount of maintenance. You may worry about finding the right tenant. How do you create a lease? How do you screen tenants so as to find the ones who will stay a long time and keep up your property for you?
You may decide to try a the truly hands-off alternative: a real estate investment trust (REIT). THis is a publicly traded fund that owns property (usually commercial) and/or mortgages. The value of these funds doesn't trend with the stock market, so that can diversify your portfolio.
But REIT funds, like mutual funds, charge management fees. Are these taking away your profits? Perhaps you would prefer a property with a deed as your real estate investment.
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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