You may have heard that real estate investment is a smart area to explore. It can generate a mostly passive stream of income, provide a variety of tax breaks, offer long-term financial gains and diversify your portfolio — you don’t want to put all your eggs in one basket after all. I’ve spoken to many people with interest in investing in real estate, but the massive investments and questions left unanswered kept them from taking the leap. Here are a few of the most common questions about real estate investing to help you decide if this is an adventure YOU might want to take!
What Is the Best Way to Finance a Real Estate Deal?
This is often a matter of preference. Here are a few options:
- Conventional loans – Just like buying your first home, you can finance real estate investments through big banking institutions with a traditional loan.
- Private lenders – You can opt to finance through a private lender. Private lenders have fewer restrictions, but you will pay for their leniency in higher rates.
- Wholesaling – This option requires no down payments or investing your own capital and is used when the process is similar to flipping a home.
Consider your goals for the investment properly, then explore each of these options to decide which would be the best fit for you.
Do I Need a Real Estate License If I Decide to Become an Investor?
There are many pros that can make having a real estate license a great idea. With a license you’ll:
- Have better access to real estate listings through the MLS
- Make a larger profit on your investment purchases because you won’t be paying a realtor
- Expand your networking opportunities to hear about more potential investments
On the flip side, not having a license allows you to:
- Save the time and expense required to get a license
- Work with multiple agents who specialize in niche areas
- Free up time by having someone else on the lookout for your opportunities
What Are the Tax Benefits of Real Estate Investing?
There are too many tax benefits to list in this short blog! But the first ones that come to mind are through rental properties. You can deduct a number of expenses associated with rentals including depreciation, repairs, interest and taxes. Read about more tax benefits here.
Where Can I Get Leads for Investment Opportunities?
Start where I tell people to start with most things — on social media! Put it out there that you, or your business if you have established one, are looking for investment properties, and follow top real estate investors to learn from them. Start a website if you’re going big and start filling it with content. And if you’re planning to work with a realtor, get connected so he or she can be on the lookout for you. These three things will help you find the leads you need.
The real estate world is a daunting one for beginners. Tap into the resources you have and get connected with those you need. If you have questions about investment properties in the Northern Virginia area, give me a call. We can create a personalized search list for you and keep you on top of the latest properties to hit the market!