Real estate investment has been a long-term proven successful strategy for building wealth in the U.S. and many other areas of the world. Real estate accounts for 60% of the world’s mainstream assets.
Although the real estate market offers plenty of opportunities for making profit, buying, owning and selling real estate is more complicated than passively investing in stocks and bonds.
The Power of Leverage…
One of the attractions that real estate investment offers in comparison to alternative typical investments is…leverage. A powerful tool that isn’t as easily available in stock market investment.
Typically, when you purchase stocks and bonds, you must pay full market value for them at the time you place the buy order. Even buying on margin accounts is much more restrictive for most investors than the more liberal leverage available for real estate investment.
In comparison, a traditional mortgage generally only requires a 20%-25% down payment. However, there are often other types of mortgage financing options that may require as little as 5% down.
This enables you to control the entire property and the equity it holds, while only paying a fraction of the total value up front.
There are, of course, other methods of passively investing in real estate through platforms such as REIT’s (real estate investment trusts) and similar real estate investment groups. Typically, however, they simply cannot offer you the same degree of leverage, control or profit potential in comparison to an individual real estate owner/investor.
Ways Real Estate Investors Make Money…
The primary ways that investors make money with real estate is…appreciation and cash flow income.
Appreciation is when a property increases in value due to change in the real estate market, land becoming scarcer, an area becoming busier through development…or making upgrades to make your property more desirable to buyers.
Positive cash flow income is often the primary focus for many investors in choosing certain types of properties, such as condos, town homes, single or multifamily home, and apartment buildings.
Most people have busy, demanding schedules and don’t have time to waste endlessly running around month after month searching for investment property. A knowledgeable agent can streamline the search process, preview & vet properties on your behalf and ensure that the process will be more efficient and successful.
In Seattle’s competitive real estate market, it’s important to choose a full-time dedicated agent who will be available evenings, weekends or whatever days and time periods work best for your schedule. Well priced properties in desirable areas are often only available for a brief time before they are under contract. So, it’s important that you and your agent will be able to react quickly when a new listing becomes available that meets your search criteria.
Mary Pong has been assisting both first time and seasoned real estate investors locate, purchase and sell profitable investment properties throughout the Seattle area for many years.
Commercial Real Estate…
Commercial real estate is a broad term describing real property used to generate a profit. Examples of commercial real estate include apartment buildings, office buildings, medical centers, malls, hotels, industrial property, warehouses, etc.
Historically, investing in commercial real estate as an alternative asset has provided millions of investors with attractive risk-adjusted returns and portfolio diversification.
Unlike stocks and bonds traded frequently on a secondary market, real estate is a scarce resource and holds intrinsic value as a hard asset. Most often, stocks are typically purchased for their selling potential, rather than their capacity as a source of income.
The investment strategy for commercial real estate is simple; there is inherent demand for real estate in a given area. Investors purchase property and make money in two ways; by leasing the property and charging tenants rent in exchange for use of the property; and second by appreciation in the value of the property over time.
It matters who you choose to represent and guide you through the process of a real estate investment transaction. Take time to do your homework in choosing professional, ethical, experienced representation. The recommendations of a knowledgeable, trusted advisor will give you the best chance of success and also help you avoid wasted time and costly pitfalls.