Real Estate Investing is the core to building wealth – but is it easy to do?
Real estate investing is a powerful wealth building tool. Since the beginning of time, ownership of land and property is what elevated a person into a position that provided security and opportunities not available to the average person.
How you earn money in real estate
There are two main ways you can earn money on a real estate investment. The first is through rents collected, whether through individuals leasing your house, or businesses leasing space from your commercial property. The monthly rents are your primary income generator.
The second way is through the sale of your investment properties. Over the years, your assets will likely have grown in value through appreciation, depending on the demand in the area in which your investment properties are located. The goal is to sell your property at a net gain, taking into consideration the cost of maintenance, property taxes and interest paid on a loan.
Factors to consider in Real Estate Investing
For those who are new to the world of investing, the idea of buying investment properties can be daunting. Traditional real estate investing requires thousands of dollars up front for a down payment and leveraging capital for a mortgage. To invest in commercial real estate, a person must have accreditation and large personal net worth to get started.
There are other factors to consider, too:
Being a Landlord
Air conditioners break, roofs leak and accidents happen. As a property owner, you are responsible for making repairs and ensuring your investment is well maintained. You’re also responsible for making sure your investment is move-in ready any time you get new tenants.
Collecting rents, managing utilities and dealing with other tenant-related issues are your responsibility. There are property management companies that can take this burden off of your shoulders, for a fee.
Whether you invest in a single-family home or commercial property, attracting qualified renters is a major endeavor. Advertising and showing a property, as well as screening potential renters, is time-consuming and costs money. A realtor or property management company could handle the tenant search on your behalf, but be prepared to pay a management fee.
What if you can’t find a tenant for several months? Any time that goes by without rent coming in means lower returns for your investment. You can mitigate this problem by investing in multifamily properties, like apartments, student housing, and senior living. Because these properties have dozens, or hundreds, of units bringing in monthly income, the lost revenue from a few empty units is outweighed by the overall income generated from the rented units.
Your goal is to sell your investment at a net gain. A lot of variables factor into this equation, including timing, market saturation, condition of your property, and more. There are also many costs factored into selling a property – listing fees, maintenance costs, and realtor fees.
For commercial property, a buyer will want to perform detailed due diligence, and it requires a team of experts to put together reports and tours of the property, plus legal fees and other costs.
Real estate investing … simplified
There’s good news: You can still be a real estate investor without having to buy, manage, and sell a property yourself. You also don’t need a ton of cash on hand or high net worth.
A Real Estate Investment Trust (REIT) is an investment vehicle that combines the power of many investors to acquire professionally-managed real estate. The REIT is on the title as the owner or partner of properties, while investors own shares of the REIT, thereby owning physical assets.
Upside Avenue is a private, non-traded REIT that invests in a diversified portfolio of multifamily, senior living, and student housing properties across the U.S. We target properties for investment that have existing cash flow with the ability to increase value through renovation and management improvements. The Upside Avenue Multi-Housing Income REIT provides investors the portfolio balancing and income-producing benefits of real estate, without the volatility of the stock market or the headache of acting as a landlord.