Investing in real estate can help to diversify your portfolio and help to guard against volatility in the stock and bond market. Generally speaking, residential and commercial property prices are not correlated with the stock market. This means that you can see gains in real estate even when stocks tumble. What else should you know about being a real estate investor?
Learn the Market
It is possible that owning commercial real estate will be extremely profitable at the same time that single-family properties are depreciating in value. According to Fortune Builders, the real estate market is largely dependent on local and regional factors. Therefore, just because homes aren’t selling well in Los Angeles doesn’t mean that they won’t sell quickly in Maine. Before buying a property or investing in another person’s home or commercial space, be sure to do your due diligence. This includes researching the demographics of an area to determine if a property can make more money as a rental as opposed to flipping it for a quick profit.
Know the Risks
According to Do Hard Money, you shouldn’t ever keep all your eggs in one basket. Have a diverse portfolio and keep yourself open to new opportunities. It is important that you consider the market health within a given sector to minimize the chances that an investment doesn’t work out. Ideally, you will have an exit strategy no matter how well or how poorly a property performs. For instance, you could choose to turn a flip into a long-term rental or sell a property to an investor to lock in your profit or cut your losses.
Find an Asset Class That Works for You
According to the Listen Money Matters podcast, there are many different ways to invest in real estate that could align with your risk tolerance and investment goals. For instance, if you don’t want to buy a home, you could be a short-term hard money lender to other investors. You could also choose to purchase shares in real estate investment trusts (REITs). A REIT invests either in mortgages or land development projects, and they can have dividends of up to 80% or more.
You don’t have to be rich to start investing in real estate today. All you need is a willingness to learn how the market works and how to manage your money. In many cases, new investors choose to find a mentor who can help them avoid rookie mistakes.
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Steelbridge Realty LLC is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.