Most of us are not going to get rich simply from our jobs – we have a limited amount of time for actively working. To reach financial independence, we have to create sources of passive income. Smart real estate investing can bring in big returns and grow your net worth.

 Like investing in the stock market, real estate investing can seem intimidating. It’s really not though. There are just some key fundamentals you need to know before you get started.

 Everyone wants to be the Donald Trump of their neighborhood. But with less turnover. Fewer walls. Better inter-neighbor relations.

 OK, maybe that was a bad example. But, maybe not.

 “It’s tangible, it’s solid, it’s beautiful. It’s artistic from my standpoint, and I just love real estate.” – Donald Trump

 Maybe this human candy corn topped with cheese whiz is on to something. Real estate is a physical asset you can touch and is not going out of business any time soon. Unless people all of sudden choose to live off the land again…

 Nah!

 No matter how you slice it, real property is here to stay, which is why many choose to put their money into it. Investing in real estate has crossed all of our minds at one point or another.

But if this is an investment option you’re considering, you may have no idea where to start.

To successfully pursue investment opportunities in the real estate market, you must first do your due diligence to ensure that you understand the intricacies of your local market and the factors that dictate the profitability of what you’re investing in.

In this article, I will offer you a broad overview of just about everything you need to know about beginning with investing in property; the very basics. And I promise, no more bear attacks or Trump references.

An overview of real estate investments

At a basic level, real estate investing is a method of making money by renting, flipping or owning residential, industrial, commercial properties, or parcels of land. Some investors may find these properties on their own, or through the use of an online real estate marketplace like Roofstock, the Multiple Listing Services, or Zillow.

Residential real estate investments are the most common forms of real estate investing. These include single-family homes, condos, and townhomes that can be re-sold or rented out to turn a profit.

For example, you buy a condo in Beach City 5 miles from you for $100,000, you rent it out on Airbnb for $100 a night, you make a lotta tuna.

Simple as that. Well, maybe there’s a bit more to it. But more on that later.

Larger residential properties and those that are intended for use by businesses fall under the category of commercial real estate. Owners can make money from commercial properties by leasing out office space or multifamily residential units.

The rule of thumb is anything that’s rented out to a business and any residential building with more than 4 units inside it, is classified as commercial. These types of properties have different lending criteria when applying for a mortgage.

Regardless of the type of property you own, you can benefit monetarily profit from an investment property in four key ways: rent, appreciation, tax benefits, and interest.

Rent

The owner of a single-family home, condo, townhome, multifamily property, commercial building, crowdfunded real estate or industrial real estate may generate rental income by leasing out all or ...

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