Chase Ink Business Unlimited Credit Card
Chase Ink Business Unlimited cardholders earn an unlimited 1.5% cash back on all spending. It also offers a sign-up bonus of 750 cash back after spending $7,500 within the first 3 months. A 0% intro APR is available for 12 months on purchases ) and that makes this a great card for real estate investors who need extra time to pay for their purchases.
Why People Invest In Real Estate
There are three main reasons Canadians invest in real estate.
Low bar to entry. Real estate investing is so popular primarily because it requires such little knowledge. Almost anyone can figure out how to buy and sell a property and rent it out. There are even firms specializing in managing investment properties, which takes away a large portion of the headache. In contrast, investing in the stock market tends to intimidate people. .
The power of leverage. Banks are willing to lend out piles of money for real estate at near-historic low interest rates. Mortgage debt reached nearly $1.44 trillion in 2018, almost eclipsing our GDP. But mortgages, a burden on principal residences, are a boon for income properties. Leverage is an extremely useful, albeit risky, tool in investing. Gains are magnified, and so are losses. They allow investors to use very little of their own cash while getting someone else to pay their debt and build their equity. You can use leverage in any kind of investment, but the banks will lend much smaller amounts at higher rates. This factor alone makes real investing attractive.
Tax benefits. Nothing eats away at returns like taxes. And like most businesses, real estate investing has several tax advantages. Investors can deduct mortgage interest, just like any other sort of investment loan . Investors can also defer income taxes by claiming property depreciation, not to mention write off any expenses for maintaining and running the property.
Invest In Landlord Insurance
Protect your new investment: In addition to homeowners insurance, rental property owners should always purchase landlord insurance. This type of insurance generally covers property damage, lost rental income, and liability protectionin case a tenant or a visitor suffers an injury as a result of property maintenance issues.
Keep in mind that standard homeowners insurance policies may not cover losses incurred while the home is rented out. Contact your insurance agent to make sure you are adequately insured.
To lower your costs, investigate whether an insurance provider will let you bundle landlord insurance with a homeowners insurance policy.
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Real Estate Investment Groups
Real estate investment groups are ideal for people who want to own rental real estate without the hassles of running it. Investing in REIGs requires a capital cushion and access to financing.
REIGs are like small mutual funds that invest in rental properties. In a typical real estate investment group, a company buys or builds a set of apartment blocks or condos, then allows investors to purchase them through the company, thereby joining the group.
A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all of the units, handling maintenance, advertising vacancies, and interviewing tenants. In exchange for conducting these management tasks, the company takes a percentage of the monthly rent.
A standard real estate investment group lease is in the investors name, and all of the units pool a portion of the rent to guard against occasional vacancies. To this end, you’ll receive some income even if your unit is empty. As long as the vacancy rate for the pooled units doesnt spike too high, there should be enough to cover costs.
More hands-off than owning rentals
Provides income and appreciation
Similar fees as mutual funds
Susceptible to unscrupulous managers
Real Estate Investment Platforms
If you’re interested in real estate funds but don’t meet the requirements of an accredited investor, you can still invest in some online real estate investment platforms.
These platforms, made popular by companies like CrowdStreet and Fundrise, let investors own a small piece of larger commercial real estate projects that offer substantially higher returns.
Some of these investments offer targeted internal rates of return of over 20%. Many of these offerings require investors to be accredited on CrowdStreet, but the majority of offerings on Fundrise are open to anyone.
While these numbers sound appealing, it’s important to remember that increased returns come with increased risk, and it’s still up to you to do your own due diligence
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Plan Your Business Marketing
Having a successful real estate business is synonymous with having a successful marketing strategy. What is your unique value proposition? Answering this question will help you establish a brand for your business and any subsequent marketing campaigns. This is also a great time to settle on a logo, core values, and a mission statement. These components will help inform how you reach out to potential customers and serve as a jumping-off point for your marketing materials.
After creating a foundation for your real estate business, it is time to start your first campaign. Read through the following list of common marketing materials for some inspiration:
S To Begin Investing In Real Estate
Investing in real estate provides leverage and control over assets if done correctly. Beginning investing in real estate is a fantastic way to grow a financial portfolio. However, getting started in real estate investing does not happen overnight and requires a level of dedication and patience. Here are the 5 steps.
1. Organizing Finances
4. Beginners Strategies for Real Estate Investing
5. Commencing The Investing Journey
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Choose A Specific Real Estate Investing Strategy
At this stage, you could create a 30-page business plan that even an MBA would be proud of. But remember, the goal is just to get started. So, lets begin with something quicker. You can create a big, detailed plan later if you want.
For now, just choose ONE real estate strategy that will help you move from your current financial stage to the next stage .
Starting with one specific strategy doesnt mean you wont have detours or even a complete change of direction later. Life happens, and you have to be flexible. But starting with just one will help you focus. And this will give you the confidence to get started.
I wrote an article with the 15 best real estate investing strategies. But below is an appreviated menu of suggested real estate strategies that you can choose from depending upon your wealth stage:
Form A Real Estate Llc
A limited liability company refers to a business structure set up to protect business costs from interfering with an investors personal finances. The designation allows investors to purchase and own real eshttps://www.fortunebuilders.com/forming-a-real-estate-llctate, without involving personal liability. Each state has different fees and regulations associated with establishing an LLC, though the overall process is largely the same:
Confirm the regulations in your state before getting started
Choose a unique business name
File an Article of Organization with your state
Create an operating agreement for the business
Publish an intent to file
Apply for a tax identification number through the IRS
After you form your LLC, a few other permits may be required before you can officially open for business. Confirm with your state what these are, and youll be on your way to securing your first deal.
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How To Start Investing In Real Estate
Millennials are starting to invest in real estate in large numbers. Individuals aged 36 years and younger accounted for the largest group of the real estate buyers over the last four years, according to the National Association of Realtors. Its no doubt that this age group is now realizing the power that real estate investments has to make a lot of money.
Proper financial management
Its important to realize the burden that loans have. Right now set a plan to manage your finances appropriately. Once you can stop accumulating additional credit card debt, car loans, etc., you can take a plan of action to start paying down debt as soon as possible. The less debt you have, the more real estate you can purchase.
Start now by putting aside a small portion of each pay check. Depending upon the size of your salary, it may be as much as 40% or as a little as 20%. However, if you get into the habit of setting aside this amount of cash each week, then you will be able to purchase a home very soon.
Make your first real estate purchase
There is a tremendous amount of information about how to invest in real estate. While there are certainly some good information, dont fall for courses or classes that cost thousands of dollars. Seek out a reputable book or blog and start learning as much as possible. I recommend The ABCs of Real Estate Investing by Ken Mcelroy as a first book!
Start accumulating more houses
Pay down your debt as soon as possible
Purchase Money Mortgage/seller Financing
The first proven way to invest in real estate with no money is through seller financing. When buyers are unable to secure a loan from financial institutions, they may opt to seek real estate financing from the sellers. With conventional real estate transactions, the buyers will provide the sellers with the cash, to gain ownership of the property. However, with a purchase money mortgage, the seller extends finances to the buyer. The buyers will then repay the sellers, for the agreed terms.
Recommended Reading: Who Is The Best Company To Invest With
Getting Started With Real Estate Investing
If youre brand new to the world of real estate investing, youll find that there are many possible paths to take.
The simplest form of real estate investing is buying a home for yourself to live in. While many dont think of this strategy as investing, a primary home is actually a great investment in that it will generally increase in value and boost your net worth substantially over time.
Buying your own home is a great way to invest in real estate with relatively little money because you can often purchase with as little as 03% down. Plus, when youre ready to move or upsize later on, you can either sell your house typically for a profit or keep it and rent it out, earning yourself passive income.
Jon Meyer, licensed loan officer and The Mortgage Reports loan expert, says that this is potentially the best way to get into rental property ownership, adding you can get better rates and terms, and potentially make more money in the long run.
But lets assume youve already explored primary homeownership. Now youre looking for different ways to invest in real estate and grow your net worth. In that case, here are a few strategies worth looking into.
Invest In Your Own Home
Primary residences are the most common way most people invest in real estate. You take out a mortgage, make your monthly payments and gradually build ownership in your home. With luck and strong demand in your local market, you can cash in on the equity when you sell your home.
While investing in your own home can help you build wealth over the long term, average annual returns are less than you might expect. From 1994 to 2019, homes only increased in value about 3.9% annually, according to a report from industry analyst Black Knight.
While there are areas of the country where home appreciation is much higher, on average the house you live in is unlikely to dramatically grow in value, especially once you figure in costs like maintenance and repairs, insurance, property taxes and the interest you pay on your mortgage.
Other real estate investments, like REITs, have seen average annual returns as high as 11.28%, according to Nareiteven a vanilla S& P 500 ETF has provided average annual returns of about 10% long term.
This isnt to say you should never buy a home or think of it as an investment. Government support for the mortgage market generally, in addition to programs that support first-time homebuyers, help you buy a home at a much lower price than would be possible with other real estate purchases.
Recommended Reading: Century 21 Homes And Investments
Strategies For Wealth Stage #4 Growth
Strategy Goal: Grow your smaller net worth into a much bigger net worth
- Fix-and-Flip houses to generate big chunks of cash. Remember to save & reinvest your profits!
- Build & grow an income property portfolio using one of these plans:
- The All-Cash Plan no debt, pay 100% cash for each property
- The Debt Snowball Plan borrow on a small number of properties, then accelerate debt pay down one property at a time
- The Buy 3-Sell 2-Keep 1 Plan buy 3 rentals, hold, then sell 2 and pay off debt on the third
- The Trade-Up Plan use 1031 tax-free exchanges to build a portfolio with strong equity and income
- Self-Directed Retirement Account Plan use a self-directed IRA or 401k to invest tax-free in private loans , rentals, or flips
Can You Start Your Own Real Estate Investment Fund
Yes, you can create your own real estate investment fund. To begin with, you must get a lawyerspecifically, a securities lawyer. This is a lawyer specialized in creating private investment offerings and handling legal issues related to the investment.
If you pass the law requirements, you will be the general partner, also known as the sponsor. You will then ask investors, or limited partners, to invest in the fund and provide capital. The accumulated funds are then used to purchase real estate property.
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How To Start A Real Estate Investment Company
Real estate investment is a growing industry, and many people are curious how to start a real estate investment company and get a share of the unlimited possible returns offered. Unfortunately, many people who start such companies fail as quickly as they start due to a lack of attention to the legal factors at play. If you are considering starting a real estate investment company, a real estate lawyer from the Priori network may be able to help you get started on the right legal footing.
What Are The Five Types Of Real Estate Properties
Having a good understanding of the different types of real estate properties can help you organize your to-do list for beginning in real estate investment. The five types of real estate properties are residential, commercial, industrial, retail, and mixed-use. Each one requires its own financing, responsibilities, and long-term plan.
The Balance does not provide tax, investment, or financial services advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.
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Best Real Estate Crowdfunding Investment Platforms Of December 2021
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Real estate crowdfunding has transformed the real estate investing landscape. Once reserved for only the most affluent investors, many crowdfunding platforms have significantly lowered the barrier to entry for this type of alternative investment.
Low account minimums, simple fee structures and clean user interfaces make it easier than ever to include real estate in a well-diversified portfolio. Its important to note that some real estate crowdfunding platforms, including three of our picks below, are open only to accredited investors.
What’s the difference between these platforms and REITs?
Real estate investments trusts are companies that own real estate, like hotels, malls, shopping centers or rental properties. Publicly traded REITs can be purchased through a brokerage just like individual stocks or mutual funds.
What’s the difference between these platforms and REITs?
How Much Money Do You Need To Invest In Real Estate
Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
There are many reasons to invest in real estate from rental income to portfolio diversification. During times of volatility in the stock and bond markets, some investors turn to hard assets such as real estate. In the past decade, investing in second homes to use for short-term rentals listed on home-sharing platforms has grown in popularity. There are several ways to get a start in real estate investing without an enormous outlay of cash.
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Understanding Risks And Taxes
Real estate investing is not without risks in terms of leverage or borrowing money for investment options.
When you buy a property, the market can change, and you might have to sell it at a lower price due to unpredictable external conditions. Lots of factors can affect the real estate market. A few of them are
- Changing local regulations can alter the best states for real estate investors.
- Rising interest rate environments can make note investing unprofitable.
- Changes to the neighborhood can impact your triple net lease renewal.
- Lending restrictions can affect investors adversely when flipping houses.
- Expiration of the Tax and Job Cuts Act provisions could kill the QBI deductions of rental property.
So, while the economy fluctuates each year, we also need to watch for other risk factors to prepare ourselves against unwanted surprises better.
While real estate investment has many tax advantages, including 1031 exchange, depreciation, opportunity zones, etc., investors need to understand the tax provisions to structure their real estate operating companies. Two of the best books are The Book On Tax Strategies For The Savvy Real Estate Investor and The Book On Advanced Tax Strategies For The Savvy Real Estate Investor By Amanda Han and Matthew MacFarland.
Discuss your options with a tax professional who knows about real estate investing versus a generic tax preparer. Seek references from real estate investment groups to find a qualified tax professional.