9/18/23
Investing: Basics
Real estate revolves around basic knowledge that one must be informed about before taking part in major deals/purchases. Moreover, investing requires investors to put money into large assets and commit to them until they find a profit from that property or a share.
First, there are two types of investors: accredited investors and non-accredited investors. Accredited investors obtain direct investments in real estate such as institutional-sized investment properties (hotels, apartments, and officer buildings) and residential properties. The requirement of becoming an accredited investor is making at least 120k income annually, but if one wants to buy small commercial lands or residential real estate, it’s not reasonable or necessary to be accredited. Thus, this is the reason why they may become a non-accredited investor.
There are also various reasons for investing, depending on amount of profit/success one would want to obtain:
Potential monthly cash flow
Equity build-up
Capital appreciation
Hedge against inflation
Potential tax benefits.
Although these methods of investing sound simple and effortless, it takes long-term commitment and dedication to stick with these for a steady profit.
The Expected Risks
Even though there are many positive consequences of investing, one must still be aware of the risks that may come along. These risks significantly decrease the amount of profit an investor can make from a deal.
Many professionals guide beginners through this process of awareness, as they aspire to ensure that no one foolishly falls into the risks of real estate investing such as general market risk, idiosyncratic risk, asset-level risk, credit risk, liquidity risk, replacement cost risk, leverage risk, and structural risk. Additionally, by helping and guiding his readers, professionals have made significant impacts on novices' lives since now they won’t make the same kind of mistakes these professionals made. This particular situation brings me to my next point: beginners and intermediate investors can learn from the mistakes of other professionals so they are more observant and aware of the risks of real estate.
In the Upcoming Future
I will examine and learn about the extensive techniques and secrets that still prevail in the realm of real estate. Additionally, I hope to learn more about the concept of flipping houses, as this is an essential skill I must understand and perform in the future when meeting clients for deals of physical properties.
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