Ask Brian Real Estate Investing FAQ



Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying and other housing inquiries email your questions to askbrian@realtybiznews.com.

Welcome to Ask Brian! This week we’ve got questions from several individuals whom are interested in the basics of how to get started in real estate investing. So I’ve taken the time out to give potential investors the basics of getting started through an FAQ.

Real estate investing is perhaps the most diversified investment method available. Some investors are very conservative and others are big risk takers. People have become wealthy at both ends of the spectrum and everywhere in between. Possibly the best part of real estate investing is that there is room for everyone. Unlike most other investment opportunities, real estate investing is not dependent on one investor being a winner at the expense of another investor being a loser. That doesn’t mean some people don’t lose money investing in real estate. It is still a risk/reward based system. However, an investor’s probability of doing well is significantly better when he/she has a foundation to build upon.


This article answers a few basic questions about real estate investing. For beginning investors, each question should stimulate curious minds to ask more in-depth questions. Here at Realty Biz News we want to help readers find answers to those questions. Whether you are an experienced investor or just beginning to consider real estate investing, please send us your questions at askbrian@realtybiznews.com. We will attempt to answer them in future FAQ posts or articles dedicated to questions requiring in-depth answers.

Q1. What are the primary benefits of real estate investing?

A1. The first answer most investors think of is positive cash flow. The money going into your bank account at the end of the month after all costs and expenses have been paid. However, there are other very important benefits along with cash flow. Tax benefits and deductions also pay you every month when you write off expenses from both your business and personal income taxes. The 2017 Tax Cuts and Jobs Act increased these write offs for many investors. You can read more about this at: realtybiznews.com/have-you-updated-your-2018-tax-strategy. Value appreciation of your property is another very real benefit from investing. This is long term but many investors have made big profits from appreciation. Real estate is also a solid hedge against inflation. Typically, real estate appreciates faster than inflation along with rents increasing as inflation rises. There are many other benefits to real estate investing depending on the specific strategy involved.

Q2. What are different ways to invest in real estate?

A2. There are almost countless investment strategies limited only by an investor’s creativity and investing goals. The most common is a landlord collecting monthly rent. Another is renting out seldom-used vacation homes. Rehabbing and flipping is a strategy near the top of the list. You’ll find tips and pointers in this article: realtybiznews.com/five-winning-property-investment-strategies. There are many low cost investment strategies including: tax liens, buying/selling options, real estate investment trusts, commercial properties, raw land speculation, mortgage notes, and many many more. Two important considerations before deciding on your strategy should be passive versus active income and the risk/reward part of the equation.

Q3. What are simple ways beginning investors get started?

A3. Most beginning investors are looking for a low cost entry method. Low barrier to entry is what attracts many beginning investors. A common method is renting your current home when you move up to a bigger home (realtybiznews.com/reap-the-benefits-invest-in-real-estate-at-a-young-age). Wholesaling by putting a property under contract and flipping it to another investor is popular when you don’t have the funds to invest yourself (realtybiznews.com/ethical-wholesaling-what-to-consider). You may also want to consider tax liens (realtybiznews.com/pros-and-cons-to-tax-lien-investing) or investing with options (realtybiznews.com/how-to-invest-with-sandwich-lease-options). The best way for a beginner to approach investing is by gaining general knowledge about several investing strategies of interest and then drilling down deep into the details about one or two of the most promising. You have to take action.

Q4. How much can I expect to earn by investing?

A4. That depends on many things. Investors can make money in any market and at any point in the real estate cycle. During the past decade we have gone through the most dramatic real estate cycle in recent history. Ten years ago, the market was flooded with foreclosures. Millions of mortgages were underwater. Properties were listed for sale for years without selling. Investors that bought during the buyer’s market made huge profits buying and holding foreclosures, short sales, and distressed properties. Real estate values didn’t only recover but increased in value beyond most people’s expectations. Rents have soared higher for years and houses that once saw underwater mortgages have not only appreciated in value but also have become the object of bidding wars in today’s market that favors sellers very much. The market cycle has come full circle. Something savvy investors know is that there are always distressed properties selling at discounted prices no matter what point of the cycle the market is in.

Real estate investing is so diversified it also means askbrian@realtybiznews.com must address more detailed questions pertinent to real world issues. Realty Biz News appreciates when readers submit more detailed questions such as the ones below. Some of these require only short answers that can be grouped together as FAQ. Others become great opportunities for Realty Biz News to develop into full-length articles that other readers also find useful.

Q5. How do I fix a broken toilet?

A5. It helps when submitting this type of question when more details are provided. For instance, is the toilet sweating condensation from the outside of the tank? Is the toilet wasting water because the tank constantly runs? Is the toilet plugged and over flowing? How do I replace a broken toilet? Any one of these problems best answered with step-by-step articles.

Q6. How do I obtain a mortgage?

A6. Not only do you want to obtain a mortgage, you want to obtain the best mortgage that fits your specific needs. The most common mortgage is a first mortgage or purchase money. There are many different types of first mortgages available. Your first steps are defining your specific needs and what you will probably qualify for. For instance, if you are a military veteran without much cash available for a down payment and closing costs, you want to learn about VA loans. If you’re not a veteran there are still many options. The most common low down payment mortgages are FHA loans. However, few people are aware of the USDA’s Rural Development mortgage guarantee program that includes single family homes without farmland. There are also loans specifically tailored to providing construction funds as part of the mortgage if the home you want to buy needs improvements.

Today’s mortgage market offers a wide variety of loan types to fit almost anyone’s needs including private loans with different requirements from the big institutions. Your goal could be minimizing your payments, which means finding a loan that doesn’t require private mortgage insurance. Refinancing and equity loans open a lot of other opportunities such as reducing the length of your mortgage from 30 years to 15 years, financing a major remodel of your existing home, or purchasing a boat. The place to begin is defining what you want the mortgage for?

Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying and other housing inquiries email your questions to askbrian@realtybiznews.com.

Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 12 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.

Comments

  1. Ante Bajic Tomasovic says:

    Dear
    I need a real estate broker, with a strong will.
    I have to sell large estate with new technology projects.
    It is in the town of Trogir, Croatia, Europe.
    Probably this offer is the only one in the world.
    My offer is a nice news.
    Best regards ,
    Dr.Ante Bajic Tomasovic ( owner )
    My assistant;
    Mr Domagoj Zutelija, speak English, mob.tel. +385 91 6330512
    Tel.fax.+385 21 571223
    Domagoj Zutelija dzutelija@gmail.com

    • Hello Dr.Ante Bajic Tomasovic,
      I sincerely appreciate your comment/question. Unfortunately, Trogir, Croatia is well outside my area of knowledge. A European Estate Specialist may be your first point of contact.
      Best wishes,
      Brian Kline

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