An Introduction to Real Estate Investing Methods

Real estate can be seen as a game. There are certain players that meet in order to make deals and certain “moves”. There are contracts, City and government regulations to serve as the “rules of the game” which prevent players from “cheating”. In this game, if you’re caught cheating, you really lose the game and can end up paying very hefty fines and even end up in jail if the rule that was broken created enough damage. On the other hand, real estate can provide a very lucrative business and a lot of success if done correctly. In this article, we will discuss five different ways to invest in real estate and how you can even create your own company like Magnolia Realty.

Real Estate Investing Methods

The common misconception among the majority of the U.S. population is that purchasing a home to live in is an “investment”. By definition, an investment is, “the action or process of investing money for profit or material result.” If we go strictly by definition, then your home would be an investment, but really it is a huge debt instrument that has you stuck with it for fifteen to thirty years. Your mind is set on working as hard as you can and spending less money on yourself so that you can pay your mortgage and not get foreclosed on. On top of that, if you wanted to move, you would either have to sell the house, or continue the monthly mortgage payments. So, let’s talk about actual real estate investments:

  • Commercial Real Estate
  • Real Estate Investment Trusts
  • Fixing and Flipping
  • Single Family Rentals
  • Mobile Home Parks

In our opinion, apartment buildings are the best investment for a few reasons. The first one being that the tenants living in the apartment complex pay the mortgage down for you, if you know how to do it correctly. Next, the bank will give a mortgage loan to an apartment building before they give a mortgage to a single-family residence because the apartment building creates income and has more people to rely on. The third reason is because bigger apartment buildings have a better chance of not being vacant. If you have one rental property with one tenant and that tenant leaves, you’re 100% vacant, but if you have one hundred apartment units and ten people leave, you would still be 90% occupied.

In conclusion, in this article we were able to list a few of the possible real estate investments you can make. People often stop the pursuit of their dreams in real estate because they believe they have to have all the money themselves, but people partner up all the time to purchase larger deals which will provide better returns. If you take the time to learn and find enough people to purchase a large property, we recommend you buy a large apartment unit complex of 16 units or more.