Investing is not a gamble which many individuals try to avoid. I would say not really. It’s a money making tool like any job or business. I know many of you won’t agree with me and I can visualize many nodding their head saying “No way”.
Let say you go to a job with the knowledge acquired from school and work towards making money and settling down in life. Similarly, if you are educated properly on investing whether it’s stock or real estate, you will invest your money yourself towards goal to get better return for your investment to either run every day life or save for future or getting more things you wanted. The only difference, you are investing your own money instead of someone paying for your work. That’s the common sense behind investing.
There are different vehicles you can use to invest. You can start your own business with passion on certain field and make active income. Or you can invest in stock market or rental properties to earn a passive income. Passive income is different than active income. Like Rich Dad, Poor Dad author Robert Kiyosaki explains in his book and this quick video, Passive income gives freedom compared to Active income. How? When Passive income start replacing your active income, you will reach your financial freedom. You don’t have to work anymore to make active income.
Enough talk about Investing in general. Let’s talk specifically into Real Estate Investing. Real Estate has always been best vehicle to use other people money and invest your money to bring in passive income without actively work on it. By buying a rental property and making it work for you does three things,
- Principal Pay down from rental
- Cash flow to build passive income
There are also other advantage like equity build up if bought low and Tax advantage as well. You can learn more about Real Estate investing on websites like RealEstateInvesting.com, BiggerPockets.com etc., The websites can explain about different strategies like Flipping, Rental, Wholeselling etc., I would strongly recommend on Rental Portfolio building for your passive income.
Rental Property Investment
As per Rental Property Investment, some thinks real estate investing is getting the property at low value and keep it invested for long and earn rental out of it. Yes, buying low and selling high is always good but doesn’t happens all the time due to the nature of the market. Building Rental portfolio is buying one property every year or every two years with your saved up cash and mortgage grow your asset and cash flow adding up Passive income. That should be the goal!!
You can find good rental properties even in the peak real estate market. You might have to pay the market price but you are building the portfolio to get passive income via cash flow. Appreciation and Equity build up should be icing on the top. Try to learn about finding good rental properties and research your local area and find a good realtor to work on investment properties. Not all realtors are good in investment properties. Many realtors work with home owners which is different than working with realtor who has experience in dealing with investment properties. Build your team slowly with Realtors, Home inspectors, mortgage company, title company and so forth by communicating with realtor and other local investors.
Next jump on the field by testing your skill by looking at properties and estimating the expense required and may be try to put some offers together and figure out the numbers. Get yourself ready and start making offers on right property with the help of the realtor. Work with him to close the property and start getting it ready to put in the market as quickly as possible so it can start making money. Don’t sit on it for long!! Wallah you are an investor now and start managing the property and experience being the landlord for 6 months or year and start slowly looking for next one.
We will talk about Managing Rental property in the next post. I have helped many to buy property and manage on their own. If you don’t want to go that route, we can also manage properties for you. Check out Flat Rate Property Manage page to get more information.