Why Invest In Real Estate?

Question 1

Reasons to invest in real estate include:

Answer 1

Profit, tax shelter, capital preservation

Question 2

Fix and flip

Answer 2

Requirements include:

Working capital for the purchase and repairs

Priced low enough to cover costs of repairs, holding period, marketing, closing costs, and profit

Remodeling skills

Eye for needed updates

Risks include:

Running out of money to finish repairs

Inability to sell due to poor market timing

Question 3

Buy and Hold

Answer 3

Requirements include:

Capital for purchase

Ability to cover debt with rental income during holding period

Risks include:

Vacancies

Cash flow shortages

Property value decline

Tenant issues

Question 4

Wholesaling

Answer 4

Requirements include:

Ability to find property at a deep discount
Thick skin due to seller reaction to low ball offers
Ability to act quickly, perhaps paying cash
Ability to resell quickly
Risks include

Lack of availability
Getting stuck with property (unable to turn property around quickly)
Paying too much up front, no profit

Question 5

REIT

Answer 5

companies that invest in professionally managed commercial properties by purchasing publicly traded shares of the company

Question 6

Limited partnership

Answer 6

private real estate investments in commercial property. The general partner is an experienced property manager or real estate development firm. The investors are the limited partners who provide financing for the real estate project in exchange for a share of ownership.

Question 7

Mutual funds with mortgage backed securities

Answer 7

Investments that take mortgages, pool the, then sell the pools of loans to investors as a single investment