For those looking to invest in real estate, it is best to heed the advice of Dom Einhorn, head of Born2Invest. His philosophy is simple yet elegant: an asset should pay the investor to be the owner. In the real estate sector, that means that Einhorn would only buy properties that produce a stream of income that recapitalizes the owner.
Anything else is not investing, but speculating, according to George Brownlee, a financial consultant.
That puts time, the major advantage of a college investor, on the side of the buyer. A previous article on The College Investor reported on how to get started in investing in real estate. A goal of that should be to develop a portfolio of income-producing real estate so that you are investing, not speculating.
There are three ways to generate income from real estate: rental properties, financing others who purchase, and buying securities based on real estate income properties.
Buying Rental Properties
For rental properties, that could entail buying a separate unit or renting out a room in your home. Either way will produce income. Sites such as American Home Solutions are excellent for exposing the individual to the options in investment property. Most of important of all, it will get you started investing in real estate at an early age and increase your base ok knowledge, which puts time on your side. It will also expose you to financial websites that can help you structure an overall investment portfolio with real estate and other assets such as Macroaxis and Axcess Financial.
Financing for Others
Income can also be produced from lending money to others who buy real estate. With crowd funding, that can be done in very small increments. Einhorn’s company, Born2Invest, is a leader a crowd funding, focusing on publicly traded companies. There are many other crowd funding sites such as GroundBreaker that specialize in real estate financing. Interest is paid to those who participate in crowd funding the real estate investment, which provides income to the individual investor.
Purchasing Real Estate Securities
Real estate investment trusts (REITs) are publicly traded securities that are excellent income vehicles for investors looking to profit from properties without managing the units. Even better for those seeking income is that REITs are required by law to pay out 90 percent of their income as dividend payments to the shareholders in order to qualify for the preferential tax treatment. Finviz (my favorite) and Yahoo! Finance are excellent free websites for exploring REITs and other publicly traded securities.
Like Einhorn said, an asset should pay the investor to be the owner.
That is especially true for real estate which has many associated costs with ownership. Many of those are tax deductible, however. This makes owning rental properties even more attractive. For those who want income from real estate without the hassles of physical ownership, there is financing the purchase of property or buying REITs or other publicly traded securities.
All are excellent tools for building an income-producing real portfolio.
As with all investing, it is important to do this with a long term outlook. For the investor, that puts time, the most powerful force in the universe, on their side. Mastering what is offered in novel ways for financing and portfolio management from Born2Invest, American Home Solutions, Macroaxis, Axxess Financial, Finviz, and others will increase the knowledge base. The combination of time, money, and access to information should prove to be very lucrative for real estate investors over the long term.
Do you invest on real estate? Why or why not?