Real estate investing may be lucrative, but doing it as a novice can be difficult.
Winston Deloney, a Chicago-based entrepreneur and real estate investor, offered us a few tips on how to get started as a new investor.
Is it a smart idea to start investing in real estate with your own home?
Yes! Acquiring a house is a tremendous long-term investment. It may enhance your credit score, give you a source of equity, and raise your net worth if done properly, all of which can assist you with your real estate investment endeavours as you can save.
Winston Deloney, will you agree that, notwithstanding the controversy surrounding Real Estate Investment Trusts (REITs), REITs are an excellent way to invest?
REITs, in my opinion, are one of the most straightforward ways to enter the commercial real estate market.
Consider a REIT to be a stock. You must donate your money to a trust or company that acquires real estate. As the value of the property rises, you’ll get a share of the dividends. Most major stock markets offer REITs for purchase and sale.
It has the potential for a large yield. Corporations must pay out at least 90% of their property revenue as dividends to investors. Furthermore, your investment is liquid; you may sell your shares and get your funds without having to sell the property.
In addition, the company handles all of your managerial responsibilities.
Can you say that house hacking is a good way to test the waters?
You may try your hand at real estate investment by renting out a basement, attic, or even a spare bedroom if you currently own or rent a house. It could cost you nothing or a few hundred dollars to furnish your home.
By doing this, you’ll save money and be able to reinvest or save for a down payment on a new home. Above all, you will be able to determine if you can tolerate being a landlord to someone.
At first, it may be challenging, but eventually, if you are committed to it, you will be able to navigate your way through it.
Winston Deloney just like other investments, is it advisable for new investors to diversify their real estate portfolio?
Diversifying your portfolio also is a method to safeguard yourself while investing in real estate.
If you had assets in several kinds of property, such as buy-to-let, commercial, and residential in various locations, and if the worst were to happen and you had a low-performing property, the other properties would serve as a financial shield and cushion the impact.
Owning assets means one has to pay taxes. How does this benefit real estate investors as a whole?
Real estate investors can take advantage of tax advantages. You guessed correctly.
Since the government encourages rental property owners, your rental property is taxed at a significantly lower rate. Long-term earnings are also subject to reduced tax rates, as well as other advantages like depreciation and the exemption of self-employment tax.