In this day and age, having multiple streams of income is extremely wise in terms of financial security! This is why people have financial investments. Some people invest in stocks, however while this method can may have some potential for financial growth, it also comes with a high level of risk! In terms of “safe” investments, owning property is always at the top of any smart investor’s list!
“There are lots of reasons why you might want to invest in real estate. It might seem like a pipe dream and out of reach for “normal people.” Many think that they have to be a savvy investor with tons of money — but, with some common sense and research, it’s pretty accessible, even for beginners.” Homelight
When you own property, you can create multiple additional streams of income with each property you invest in! Some real estate investments can take time to start seeing a return on investment, but when they do you’ll be grateful you took the leap into owning real estate. For beginners, the prospect of investing in real estate for profit may feel overwhelming and confusing. Don’t go into it blindly!
Attorney Ben Weaver is here to guide you in your real estate investment journey with some key advice…
Why real estate is a top investment…
Majority of properties start to increase in value due to population growth and community development. Having a long history of owning property may be a wiser choice than other investments. If you think about it, people will always need a place to live and business will always need a location to sell their products.
“Real estate is generally a great investment option. It can generate ongoing passive income and can be a good long-term investment if the value increases over time. You may even use it as a part of your overall strategy to begin building wealth.” The Balance
Why should I invest in real estate? Here are 8 great reasons you should own real estate:
- 90% of millionaires have become a millionaire as a result of owning real estate. It adds substantially to your net worth.
- Entrepreneurs have a greater opportunity to become wealthy through real estate than other businesses they may wish to start.
- Real estate doesn’t require a degree from college and doesn’t care what GPA you got, nor care where you went to school.
- Real estate doesn’t discriminate based on age, race, background, etc. but laws make it so that you have to be at least 18 years of age to purchase real estate as this is the age you are legally perceived as having the ability to read and understand contracts.
- Credit scores don’t matter in real estate as there are many other ways to purchase real estate besides bank financing. If you use bank financing then you will need a credit score.
- You don’t have to be involved in real estate full time to be successful
- You can live in another state or country and still invest in real estate in a specific city other than the one in which you live in
- Real estate can provide you with steady monthly income
Already own your own home? This gives you an advantage to real estate investment. The average person is going to get their first real estate ownership experience the traditional way, by purchasing a home. When you buy your first home, it gives you a wealth of experience when it comes to tasks like: hiring appraisers, dealing with realtors, signing and reviewing documents with an attorney, and finally the closing. Read our previous blog for a full rundown of all the important roles an real estate attorney plays in the selling process.
This isn’t an investment in the same way as an apartment building. It’s more of a strategic investment. Think of a home as a type of forced savings account that gives you a lot of personal use and joy while you reside in it. Understanding property ownership is the first step to becoming a strong investor. Home ownership gives you hands-on experience with property upkeep!
“Real estate has different land uses. Some people own land zoned for residential living, while others own commercial property for offices, or industrial property for buildings and warehouses. Real estate involves long term commitments and is an illiquid asset that cannot be quickly bought or sold within the second like a stock can. Since you’ll be owning real estate or land for a long time you have to consider the long term commitments. These include repairs and maintenance, property taxes, insurance, and the future use of the property as laws and times change and cities grow and develop.” Under 30 Wealth
A Few Pro Tips to Keep In Mind…
Plan out your expenses ahead of time
Research everything – the location, property, demographics
Weigh the risks vs. rewards
Consult professionals before making any final decisions
Understand your legal obligations
What kind of investor are you? What is your goal?
Before making an important financial decision, you must first consider what you want to invest in, our long-term investment goals, and why you are doing it. For instance there are a variety of real estate categories such as commercial, residential, industrial, and mixed-use. Knowing the answers to these questions will help you figure out what kind of investor you are and allows you to start a game plan for obtaining the property that is right for you!
According to The Balance: “Real estate is one of the five basic asset classes that every investor should consider adding to their portfolios. It offers unique cash flow, liquidity, profitability, tax advantages, and diversification benefits. Real estate investing covers a broad category of operating, investing, and financial activities centered around making money from property or cash flows tied to a tangible property. There are several ways to make money in real estate, but some can take time to start paying off. Some experts suggest that you start investing when you’re young, even in your twenties.”
Did you buy a property specifically for turning a monthly profit? You’ve gone through the process of buying your personal property and it was a seamless endeavor when done with your attorney. You may notice there are other homes or apartment buildings in your neighborhood worth investing in. Being this type of investor, you need to consider a few things before you start renting to establish a baseline for property rental value:
- Property and income taxes
- Insurance (Get the right insurance for your property with our guide!)
- Other related expenditures
“About half the states have statutes on landlord’s access to rental property specifying when and how landlords may legally enter rented property.” NOLO
Did you inherit a property after the loss of a loved one? Unsure of what to do with it while dealing with everything else in the will of your dearly departed? Renting or immediate sale of property may be a good choice for you but there is much to understand about real estate law in your state first. When property is connected to a legal will, it is extremely important you have guidance from a real estate attorney. Learn more about living wills and estate planning!
Eager Home Flipper
There are times when what seems like a quick home flip takes longer than planned. You may have discovered a property you just couldn’t turn your back on. This property has been an investment – but you’ve found that with the current events in our country, selling the home isn’t possible at the moment. Rather than leave the property sitting and losing money every month while you wait to find a buyer, your real estate attorney can help you to draft leases specifically for potential tenants to rent or sublet your property until a final sale on the property can be made.
How does real estate accumulate value?
The value of your property depends on the real estate market. A property’s value can skyrocket when a neighborhood becomes more desirable because of better education from high score testing schools, low crime rate, proximity to malls, public transportation and even celebrity endorsements.
“Successful people have the money to move and live pretty much wherever they want, so they can add buzz to certain neighborhoods just by moving in. That buzz can translate into increased interest in the neighborhood, especially if the area isn’t known for having famous residents.” CBS News
Having a knowledgeable real estate attorney (REA) on your side is the key to success!
Their trustworthy reputation, legal expertise, and strong relationships with local real estate agents can give you a better opportunity to purchase the right property and make a smart investment. Not doing proper research on area you are interested in or forgetting to conduct a property evaluation before making a deal can be the cause of a financial failure. The key to finding a potential neighborhood right for your investment plans all starts with choosing the right property. Not sure how to find the best neighborhood for your investment? Check out this guide to selecting the right neighborhood!
Build Your Dream Team!
When it comes to doing business in the real estate industry, who you know does matter! You will need a range of help when selecting and investing in a property. Having a team that you can trust will ensure the process of property investing goes smoothly. Your real estate attorney is the perfect guide to put you in contact with reputable contractors and agents in your area. An experienced attorney like Ben Weaver has long-standing developed relationships with members of the real estate community.
Make a checklist to make sure you have valuable team members on your side:
- Inner Circle: spouse, family, experienced friends, business partner, business mentor
- Support Circle: property manager, attorney specializing in real estate, realtor, real estate agent, investment firm
- Service Circle: home inspector, electrician, plumber, HVAC technician, handyman, painter, yard service, pest & moisture control, general contractor (for bigger remodels and pulling permits).
“Real estate attorneys help with the “hard to translate” legal details and jargon. Your attorney can even help you determine which repairs need to be made to your property before selling and provide you with recommendations of who to call. This is especially important because the condition of the home is a major deciding factor in the sale of the property.” 23 Legal
The risk of investing in real estate without the guidance of an attorney…
You DO NOT know all there is to flipping homes just because you watch DIY home shows! While watching entertaining home flipping shows can inspire us and gives you some useful tips on home design, there’s so much more to the process! Your success as an investor is determined by how much you invest in yourself first! Equip yourself with the right tools to succeed. The best chance you can give yourself starts with hiring an attorney you can trust.
TV shows, books, and word of mouth advice cannot prepare you for the legal hurdles you will face as an investor. Property investments are generally long term projects that require a great deal of legal documents and financial decisions. Regardless of which kind of real estate investment you plan on making, the legal documents are substantial. One simple mistake on any of these important agreements can cause serious ramifications, even potential loss in your investment all together. Read our previous blog “Common Real Estate Situations That Require An Attorney” to learn the many ways attorney Ben Weaver can assist you!
“Expert advice is always a good idea when you’re making a life-changing financial decision, and a sale or purchase of a home certainly fits that description. There are several situations in which a real estate attorney can be helpful in the home-buying and selling process, from reviewing the purchase contract in a typical sale to dealing with a uniquely complicated one.” Forbes