Real Estate Investment

Thinking about investing in real estate as a side business or as small business. Real estate are great passive/semi-active investment. Although there is no definitive answer on whether real estate investing is better than stock investing (because they are two different vehicles), real estate investment could still play a role to play in your portfolio as business owner.

Real estates are good additional income stream (if designed for that purpose) for small business owners who often don’t have the time to pursue other active means of gathering wealth. If you plan to pursue this route, below are few advice to guide along the journey.

Getting Started –Real Estate

• Start Small
  • If you have never invested in real estate, you should consider starting small to get a sense of whether it is the right type of vehicle for you.
• Location-Location-Location
  • Buy your first property in a great location, with great net cash flow potential (Rent-to-Mortgage ratio).
• Work with a Realtor
  • Work with a good realtor, who understands your investment needs. Plan to hold the property for some time. Purchase and sales costs can quickly eat into your margins if you sell too quickly.
• Again, Start Small
  • Make sure you can afford the mortgage in the event that your renters fails to pay you on time. Don’t buy a property because its looks great. It is business, not your home.
• Potential-Potential-Potential
  • You may have to buy a property that needs some minor repairs to get a great deal.
• Don’t sell your cash cow.
  • If a property is generating steady profit for you, then keep it for along as it is tax efficient to do so.
• Plan to keep up with repairs
  • There is nothing more aggravating to a tenant when it comes to renting than a landlord, that is not responsive to a repair request. It shows that you don’t care very much about the property and neither should they.
• Legal and Taxes
  • Work with an accountant to determine the tax implications of your investment approach. (Cash vs mortgage vs owner financing).
  • Seek an attorney’s help in drafting your first lease. A lease is a contract and real estate laws vary from state-to-state. What may be a mundane issue in one neighbor, may be an important issue in another (e.g. easement).
  • Screen your first tenant carefully, it could your first experience a bliss or an absolute nightmare.
• Other helpful resources
  • Follow many of the real estate investment forums and blogs out there. Below are some links you should consider visiting.
    • Biggerpocket.com
    • Fortunebuilder.com

Disclaimer

The information provided above does not establish that an advisory relationship between Bancrest Global Advisors LLC. and the reader(s). The information is provided for educational purposes only and should not be considered as investment advice. All investment carries some risk, please consult with your investment advisor before embarking on any investment, to determine the suitability of that vehicle for your investment profile and needs.