Beat the Crowd When Investing in Real EstatePosted by realestate realestateagents on May 18th, 2021 
We all are great deal of thought and some of us are in fact taking action and getting their practical real estate investment properties. The longer the NY Stock Exchanges doesn't produce desirable returns the more people are starting with property investments.
For most of us the most obvious choice of properties are single family homes. Although it is possible to invest in real estate without owning a home, most people follow the knowledge they made while purchasing their own home. That is familiar ground and the training curve for doing a property deal of the type is pretty slim.
Of course there is a drawback with this approach. Your competition is fierce and there are markets where investors are artificially driving up the cost of the properties while completely discouraging first-time home buyers. If this is actually the case, the burst of the true estate bubble is a matter of time.
How do you avoid these circumstances and still successfully invest in real estate? How would you get ahead of the competition and be prepared for bad times in property investments as well? The only answer I have is commercial real estate.
Why commercial real estate you might ask? Commercial real estate is really a solid investment in bad and the good times of the local real estate market. The commercial property I'm discussing are multi unit apartment buildings.
Yes you will become a landlord and No you don't have to do the work by yourself. You are the owner rather than the manager of the apartment building. The expense of owning and managing the building is part of your expenses and will be included in the rent income.
Apartment buildings are believed commercial real estate if there are 5 or more units. To help make the numbers work you should look at to either own multiple small apartment buildings or you need to opt for bigger buildings. This will keep carefully the expense to income ratio at a confident cashflow. Owning rental properties is all about positive cash flow.
With investing in single family homes it is easy to achieve positive cash flow. Even though your rent income doesn't cover your expenses 100%, the appreciation of the home will contribute to the positive cash flow. With commercial real estate the rules are different.
While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate doesn't care about the value appreciation of other buildings. The value of the house is solely in line with the rent income. To increase the value of a commercial real estate you need to discover a way to increase the rent income. The formula on how this is calculated will be too much for this short article. I listed several very helpful books to purchase all the details.
What's another advantage to purchase commercial real estate? Commercial real estate financing is completely different than financing a single family home. While financing a single family home you are susceptible to lenders who want to ensure that you are in the position to pay for the house with your personal income. Commercial property financing is situated in the properties ability to produce positive cash flow and to cover the financing cost.
After reading all these information regarding commercial real estate you need to go out there and dive into the deals. Not fast. First, you should learn as much about property as possible. In commercial property you're dealing with professionals. In the event that you come across too much as a newbie you will waste these guys's time and your commercial property career ended before it actually started. Second, no commercial property lender will lend you hardly any money if you can't show at the very least a little bit of owning a home experience.
What's the solution to this? Go out there and do a couple of single family home deals yourself. It doesn't matter if you make huge profits to start off with. Most newbie investors are losing profits on their first deal anyway. When you can manage to show positive cashflow with your single house deals you are ahead of the pack.
My advice, buy a small single house in a good neighborhood and rent it immediately. This can keep your from the pocket expenses at the very least and you will have rent income to cover for your monthly expenses. Bonus, you get experience as an investor and as a landlord.
Here's another observation I made within my real estate investment career. A lot of people prefer to analyze, learn, discuss and analyze some more. They never actually got to do a property deal. They love to discuss property investments, but never achieved it themselves.
My approach to owning a home was simple.
- I purchased some books about owning a home.
- I read every one of them.
- I put together a simple plan on how I wish to get started.
- I started looking for properties.
- I purchased my first investment property 30 days after I started reading my first book.
- I made positive cash flow with most of my properties so far.
What is my point? You must go out there and practice what you've learned. The only real valid credential in the real estate business is practical experience.
Hoboken Realtors Having several deals under your belt, it is possible to go out there and start looking at commercial real estate and even impress seasoned investors with your knowledge. Because you made this experience on your own and you know what you're talking about.
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