Investing in real estate: a smarter approach

Although most financial planners advise their clients that real estate investing should be a central component of an overall investment strategy, it is important to fully consider personal needs, limitations, goals and priorities, pursue the best paths , to proceed and invest wisely, for one’s personal and general financial situation. Some invest in real estate, passively, by purchasing shares of a Real Estate Investment Trust (REIT), but, it must be understood, these are not all created equal and there are challenges and limitations. Others become shareholders, or junior/limited partners, in someone else’s project. Another approach is to invest in real estate, by purchasing smaller, specific investment properties, such as two-family homes and/or smaller single-family homes. A few participate in larger projects, because they can and are willing to. Regardless of how you proceed, it is important to do it intelligently and, in a well-considered, focused manner. With that in mind, this article will attempt to briefly consider, examine, review, and discuss what this means and represents, and a smart approach to investing and participating in real estate.

1. Personal house/residence: Although most people buy a home because it makes sense to them and is considered by many to be part of the so-called American Dream, it would be wise to consider price, neighborhood, and other relevant aspects. Financial considerations.

two. Real Estate Investment Trust (REIT): Some get involved by buying shares in a Real Estate Investment Trust, which is often referred to as, REIT. These vehicles are somewhat similar to stocks and other securities, but with certain significant differences. The first rule of thumb should be to realize that not all projects are the same and that some backers have a much better track record than others. Also, past performance is no guarantee, in the future. Another problem is that there is often very limited liquidity for these, during specific periods, so if one needs liquidity, it’s probably not for them. Year REITS It should be considered, when appropriate for an individual, after he carefully realizes the advantages and disadvantages, as well as the possible risks and rewards. Buying these means that one is buying a partial or limited ownership position in a specific project.

3. Investment, residential property: Some are drawn to invest in residential investment property, whether it be multi-family homes or a single unit, being bought, rented, for investment purposes. Consider cash flow, rate of return, start-up funds, required reserve funds and personal comfort zone, issues related to the responsibilities of homeownership.

Four. Larger projects: Wealthier people often participate through larger investments. However, the same considerations, and what the risks may be, versus the rewards, need to be carefully considered at the outset.

For most, investing in real estate is worth considering as a component of the financial/investment portfolio. However, before doing so, it is important to do it in a smart and well-considered way.