By Anthony O. Kellum
To invest or not to invest? That is the burning question of 2020. If you are ripe for investment in 2020, rental properties are a great way to invest your money. To be more specific, residential income property is the way to go! If you are newer to investing or contemplating if real estate investing is for you, this article will provide you with some insight and clarity.
For many real estate is the easiest way to investment and to understand because it is straight-forward, simple and involves a fair exchange between the property owner and the property user. But investing in real estate as an investment property is a tad more complex because there is more to consider, such as: the numerous types of investments to chose from including residential, industrial and commercial…let’s not forget real estate that trades on stock exchanges (REIT’s).
One thing to always keep in mind when considering buying into real estate are interest rates. Currently forecasts for 2020 are averaging 3.73% but there may be some fluctuation and of course your credit score will also play a factor.
Let’s explore real estate investments for beginners. When you decide to invest in real estate the goal is to stash money away today in order to have it grow so you have more money in future. The purpose is to absorb your risks, so you are able to make a profit or “return.” Let’s consider what this means: the risk you are taking includes taxes, the cost to cover your real estate investment i.e.: insurance and utilities.
Now let’s check out different types of real estate investments. There are 8 different types of real estate investments that you should be aware of before making an investment decision.
1. Commercial Real Estate
2. Industrial Real Estate
3. Residential Real Estate
4. Retail Real Estate
5. Mixed-Use Real Estate
6. Mortgage Lending
7. Sales/leaseback transactions
8. Real Estate Investment Trust
Each type of real estate investment has benefits and weaknesses. You have to do your due diligence to determine what is the best investment for you.
Best place to put my down payment money. Once you have decided that you are purchasing property and whether it is for your primary residence or an investment property ~ it is imperative that you know how to protect your down payment money and how to keep it accessible.
True or not…the Real Estate Myth. You need a TON of money to get started. This is probably the number one myth that keeps potential investors from taking the leap into real estate investments. That’s not to say that there are not deals that are expensive to get done BUT there are also deals you can make to purchase property for less than you think. You just have to be more creative.
Here are a few strategies to start your journey towards investment.
· Automate your savings: Be disciplined and set aside a certain amount of money every month. If you find that to be too challenging, take advantage of the numerous apps (i.e.: round up your purchases and other transactions to the nearest dollar which you can use as an internal or “forced” savings that makes saving a bit easier. Also, check with your bank or credit union to make automatic deductions.
· Manage your debts: Prior to saving, determine what your actual debt is, how much it is costing you to carry the debt and how quickly can you rid yourself of the debt? If you are carrying a lot of high-interest rate debt, it makes sense to pay off as much as you can before you invest.
· Think about your retirement: A major consideration when thinking about investing is to make sure that you have enough money once you stop working. A major priority is to take advantage of your employer’s retirement options. Some employers match part or all of your contributions. Take advantage!
· How to invest $500: Although this may not seem like a large sum of money to invest, $500 can go far in establishing your investment portfolio or you can put it in a Certificate of Deposit (CD). There are other options to explore to help you make your investment decisions.
As all investment decisions are made, it’s important that you make the best decision for you and your family. Do your due diligence, save and explore your options.
Ninety percent of all millionaires become so through owning real estate.
Anthony O. Kellum, Speaker, Author and TV Host NMLS # 1267030 President of Kellum Mortgage, LLC Powered by Local Lending Group NMLS # 1564678. Connect with me on Facebook at: www.facebook.com/propertyispower. O: 248-599-1624 E: email@example.com Anthony O. Kellum is on a mission to save the American Dream of Homeownership. Access to credit and serving distressed communities remains my chief focus.