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EP #12: REAL ESTATE

12, Podcast  Oct 18, 2020

Today we will be talking about investment in real estate. This is another form of investment that can help you grow your money. This market is like the stock market in two major aspects. First, it has a similar cycle where the market goes through highs and lows, and secondly, it has the element of speculation, just like the Stock Market. And you should do comprehensive research before investing your money. 


So what are the benefits of Real Estate investment?

Property appreciates: Property value increases with time. This way, an individual can buy a property at a low price and consequently sell it off in the future for a much higher value. 


Moreover, one can purchase a property and rent it out. This is another great way of growing your wealth and saving for future prospects. 


Tax Benefits for property: One of the biggest real estate tax goals for investors is in the form of deductions. These include mortgage interest, property tax, operating expenses, depreciation, etc. 

Type of real estate investments


There are numerous types of real estate investment options available these include the following:-

Purchase raw land and utilize that land to build up another investment or you can construct residential homes and rent them out.  Real estate trust deeds which are analogous to mutual funds in stock markets. A trust is created where you get to invest in.


You can invest in commercial real estate where you can lease the property to an office or any other business. An investor can consider the option of incorporating tax lien. This is when someone doesn’t pay tax, a lien is imposed by law upon a property to secure the payment of taxes. A tax lien is considered to be a risky method.


Buy mortgage notes from a property owner and pay the owner a monthly payment instead of going through a conventional loan through the bank. Buy a property and hold until the value increases.Buy and rent out property.


Flipping, This is when you buy houses that need TLC. What you would do is fix these properties and then resell it at a higher price to gain profits.


Rules to consider


Investors should consider a few rules when investing in property. One of them is the 2% rule. This is applied when you have rented out a property. The rule states that the rent should be 2% of the purchase price. The second rule is the 70% rule. This is relevant when you are purchasing a property. It states that you should purchase the property at a price where you are paying 70% of the market price minus expenses and rehab. 


Final Note:

It is important to do detailed research when purchasing a property. You can make mistakes when buying a house and regret it later. Try to avoid these mistakes by evaluating your purchase and following certain rules.  

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