What is Real Estate Investing?

Growing your money!

Better Homes and Gardens posted in a rent article that 89 percent of U.S. investors are interested in putting their money into real estate.  There are two ways of doing this and that is the conventional way or the non-conventional way.

Conventional is using financial institutions to finance or leveraging your own money for the purchase of properties for uses other than personal.  It can be to build an investment portfolio or to create passive income.  Passive income means that the income you receive from your investment is generated other than by you.  In other words, holding a rental property will create rental income and after expenses, the net income is your passive income.  You did not personally use your own sweat and tears to generate it  unlike where you work , you are compensated for your time and effort.

The idea of creating passive income is that if you have enough of it, it can supplement your income or provide enough to meet all of your income needs, as in the case of let's say, retirement needs.  Sounds simple; but it's not!  If you are thinking about this type of investment, you definitely should seek out advice from your own financial adviser, read up on the subject and talk to others already investing in real estate; whether conventional or non-conventional.

Non-conventional is lending your money or what is called becoming a private lender.  They charge a higher rate than a conventional financial institutions; however they may provide you more flexibility and options for your investment needs.  A private lender may lend to those who are trying to rebuild their credit and the rates charges can be even higher.  The lending criteria is unique to you, therefore do your due diligence prior to any lending and yes seek independent advice from your adviser.

Regardless of the method of investing you choose or are comfortable with, real estate investing allows you more control and flexibility on your investment dollars.  Unlike buying a mutual fund or deposit of certificate or an IRA or other type investment vehicle; the institution issuing those type of investments controls the results; like term, interest rate, use, volatility and risk of losing your principal.  Whereas, your investment in real estate is all up to you to decide when to lend, how much, to who and what type of property.  

Most people who invest in real estate, have real propriety as their protection or collateral.  In a worst case scenario, you as the lender can simply take back the property, sell it and recoup your investment.  Real estate investors are motivated by double digit returns, protected investments and full control on re-investment opportunities.  

Like I said, if you want to supplement your income, build a portfolio or create retirement income, regardless of your purpose or objectives; I encourage you to educate yourself and hopefully you will get ideas or it will help you decide to become a real estate investor or will help guide you in creating good  and safe experiences.

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