Is Real Estate Investing Out Of Your League?
By:Steven W. Hammons
Investing in real estate has gotten a lot of attention over the last few years. Unfortunately however, many people still consider this to be something for 'the big boys'. This kind of black-and-white thinking is stimulated by our beliefs, which in turn are largely fed by the media.
In movies and TV shows the business of real
estate is often associated with millionaires and even billionaires.
Since most people don't fall into either one of these categories, it's
easy for them to consider real estate to be something that's out of
their league.
They might say something like "I'm no Donald Trump, so I can't do it!". Have you ever heard anyone make a statement like that? Have you ever thought something along those lines yourself? Chances are your answer to either or both of these questions is... "YES"!
Let's take a look at the world around us to see if our assumptions about what it takes to be in real estate are correct.
If you were to look at all the real
estate around you, you would quickly find that the majority of properties
are residential. Home owners are real estate investors and as you probably
know, most home owners are not millionaires.
Owning your own home can be a great first step for a number of reasons. Obviously, as the value of your house increases, so does your net worth. However the potential benefits don't end there. The appreciation of your house over time not only builds your net worth, but it can also give you a great opportunity for creating some leverage.
By refinancing your home, you can put excess money in your hands that you can use to invest in other properties. This could be another residential property generating rental income, but you could also look at commercial real estate.
Many people tend to think about commercial
real estate as shopping malls, skyscrapers and office buildings
for multinational corporations. This is the picture that is communicated
in the media. In reality, the second largest category of real estate
consists of small to medium sized business properties... the corner
shop grocery, the neighborhood hardware store and your local restaurant
are just a few examples.
The value of these properties doesn't usually run into the millions and many are owned by people that are not millionaires. Not yet anyway. However their investment, if managed properly, provides them with a steady annual return that puts them on the path to becoming a millionaire over time.
Of course refinancing your home to raise investment capital is not something you should do overnight without careful consideration of the consequences.
Any investment brings a certain portion of risk with it and you should factor in these risks in your refinancing decision:
Also, you should take notice of the tax
laws in your state or country regarding potential deductions and
taxation of different investments. It's important to get good advice
before entering into a project like this, so talk to someone that is
knowledgeable in the area you wish to invest in.
Many real estate opportunities don't require millions to get started and make some money... some don't require ANY money.
You don't need to be a Donald Trump to be a successful real estate investor. What you do need is:
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Some capital to get started
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Some homework on the real estate market in your area
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Some good advice from people who know what they're talking about
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And most importantly, the courage to take the first step
Even if you don't know everything, it's a good idea to just go out there and find out what you need to know. You will never know everything and you will probably learn more by doing.
As long as you make sure that you manage your risks, you will find that there are some pretty good opportunities well within your league!
To your investing success
Steven W. Hammon
Steven W. Hammons has been the chief sales & marketing officer of three national corporations, business entrepreneur and consultant for the past 36 years. A real estate investor since 1982, Steven is Vice President and co-owner of RealEstateIncome4You.com. Steven is also the publisher of "Real Estate Straight Talk" (http://www.realestatestraighttalk.info), a bi-monthly newsletter for real estate investors.