Do you want to start property investment full time but don’t know where to begin? Don’t worry, that’s what we are here to help you with. Property investment is a great way to diversify your portfolio or add an additional stream of income. It also has the potential to be very lucrative.
The problem is that, in many cases, new investors don’t know where or how to invest in real estate. However, it appears you are not in that category because you are here making the effort to educate yourself, which is great!
Decide Whether to Be an Active or Passive Investor
An active property investor is someone who will be managing their investment properties themselves rather than hiring a professional property management company to do it for them.
A passive property investor is one who delegates most of the work involved in owning and managing a property to a professional property management company (more about this in a moment).
Next, you will need to decide where to begin investing.
Decide Where to Begin with Property Investment
There are four different categories when it comes to real estate investing. For most new property investors, it’s best to select just one type of property to begin with. Once you become more experienced, you can add other types of properties to your real estate investment portfolio.
Residential Real Estate
Residential real estate includes single-family houses, apartment buildings (multifamily housing), condos, townhomes, vacation properties, and any other type of home where people live.
Residential real estate is generally the easiest area of real estate investing for an investor that is just beginning their real estate investment journey.
Commercial Real Estate (CRE)
Commercial real estate, sometimes referred to as CRE, includes retail space, office space, and any other space used for business purposes. Commercial real estate is typically more expensive than residential real estate. Additionally, when you invest in commercial real estate, you will be managing more property. Therefore, most investors find it best to hire a professional property management company to handle the day-to-day operations for them.
Industrial Real Estate
Industrial real estate includes storage units, warehouses, and other “special use” structures that are used to generate sales.
Land is frequently purchased as an investment as well. Investing in land could include buying land for future development, agriculture to grow crops, raising livestock, or to be subdivided into a residential subdivision. Just be aware that, in some areas, selling land might not be a quick endeavor.
Property Investment Options
Single Family Homes
Many new investors start by buying single-family homes and using them for reoccurring rental income. When you buy a single-family home, you have reoccurring rental income along with an appreciating asset that you can sell later. Not to mention the tax benefits you will be eligible for.
Investing in a REIT (real estate investment trust) is also a good option for people who want to start property investment. A real estate investment trust is a company that purchases, owns, and operates different types of real estate, such as single-family home rentals, student housing, commercial properties, and more. You can invest in a publicly-traded REIT by buying shares through a broker. You can also purchase REIT shares through a mutual fund or REIT exchange-traded fund.
The way you make money when you invest in a REIT is simple. The REIT purchases investment properties and collects rents from tenants. The rent generated is paid to shareholders through dividends.
Investing in commercial properties is another popular property investment option. Your commercial properties could earn money through income, appreciation, or both. Your income is produced through the operation of the building. This generally happens through your tenants making rental payments to you. And the appreciation of your asset happens when your property’s value increases over time.
The best type of commercial property to invest in is one that is capable of bringing you the highest return on your investment. That means a property that has the highest number of tenants will bring you a higher return because there are more people paying rent. This could be office buildings, storage facilities, RV parks, student housing, etc.
Just remember the more people you have to deal with, the more time will be needed to handle the management of your investment. Additionally, managing more people comes with more day-to-day issues, so you will need a larger staff of trained management personnel to manage your investment(s) properly.
This is important because hiring people who are not properly trained could land you in significant legal trouble. Lawsuits resulting from accident claims, fair housing issues, wrongful death, crime issues, and many other things that can and do happen when you hire people who haven’t been properly trained and don’t know what they are doing.
So what is the absolute best possible solution to being a property investor without all the risk and hassles of the day-to-day operations? Hire a professional property management company. Doing this will put all the burden on them—not you. Then all you have to do is sit back, relax, and collect a check every month.
If you want more information about how a professional property management company can help you acquire and/or manage your investment, please Contact Strategic Properties Group today. We are a local Tampa-based real estate company specializing in property management, leasing, and development of investment properties. We would love to show you how using our services can provide you with the best possible return on your investment.