Connect with us

People & Lifestyle

How To Make The Most Of Your Real Estate Investments

Published

on

Real Estate investing is a great way to both diversify your asset portfolio and grow your investments. Investing in real estate is popular among many different types of investors and there are many reasons that make real estate and investors go to investment. I have compiled some of the best tips to ensure that you are making the most of your real estate investments.

 

If you can follow these there is no doubt that you will be able to turn your real estate investment into a money making machine. 

Pick Good Tenants 

If you are involved in real estate you will understand the importance of picking good tenants. Picking good tenants is one of the most important ways to save time and be profitable when you are involved in real estate investing. Picking good tenants may take you more time in the short run but it will definitely benefit you in the long run. Picking the right tenants and estate planning will save you from worrying about being paid on time as good tenants are never delinquent with their payments. 

Understand the Tax Implications 

Another important thing to consider in order to make the most of your real estate investment is to understand the taxes. Having a good understanding of how taxes affect your real estate investment plays a huge part in how successful real estate plays in your portfolio. I would personally recommend speaking to a tax professional who can help you decide the best way for you to invest in real estate. For example, it may not be the best decision for you to take capital cost allowance or depreciation against your rental building. This is especially true if you are planning on selling your property and you expect the value of the investment to go up over time. Taking the depreciation off of a building can result in a huge tax bill when it comes to selling the property

The Three Pillars of Real Estate Value 

Real estate investments often offer three forms of value to investors. The first form of value that real estate brings investors are the recurring cash flows. The rental payments received from tenants create a steady stream of income for the landlord. This is a good way for investors to earn an immediate return on their investment. The second form of value that a real estatement investment brings is underlying asset appreciation. This is what happens when the value of the real estate goes up in price and current value exceeds the purchase price of the asset. This offers value to the investor in the form of a capital gain. The third form of value that a real estate investment adds is tangibility and useability. The fact that a real estate investment is tangible and real is a benefit of its own. This is because the land can always be used by the investor if they decide that they need to use it. The investor may decide that they want to use the property as part of a new business they are starting, or if it is a residential property they may want to move into the property or lease it to family or friends.  In order to make sure you are making the most of your real estate investments you should make sure you have at least two out of the three value pillars. Make sure your rental property is creating a positive cashflow and also make sure your property is appreciating in value. If your rental property is not doing two out of three things, maybe you should look for a better property elsewhere or start charging more for monthly rent. 

Rent out your Personal Residence 

You may think that your home is your home and that you do not want tenants living with you. Maybe you should think again, a recent survey of your Americans revealed that 35% of your adults would consider living with roommates after they purchased their first home. With the cost of living increasing these days it is no wonder why millenials are willing to shack up with a bunch of roommates after they purchase a home. Renting out your personal residence can help reduce the cost of your living and it could even pay for you to live their. Renting out part of your home can really benefit you especially if you are younger and not starting a family for some time. If you are thinking of renting out part of your home, you should consider reading more at https://actonadu.com/blog/home-away-from-home-the-benefits-of-adus-as-family-housing-for-loved-ones where they explain how to rent out part of your home using something called an accesoary dwelling unit. There are some benefits of renting out part of your home by using an accessory dwelling unit. Besides the fact that you can help those who may be struggling a bit in life, you get an extra pair of hands for some household chores you may be needing some assistance with.

Investing Using Real Estate Investment Trusts 

Maybe you do not have enough money to purchase or finance an investment property at this point in your life, and maybe you do not want to rent out your personal residence. You may be left wondering how you can invest in real estate? Easy. You can invest in an investment product called Real Estate Investment Trusts or REITS for short. REITS are a kind of financial instrument that works similarly to a mutual fund except that a REIT holds a bunch of investment properties instead of stocks. REITS can be a good way for an investor to gain put real estate in their portfolio without having to directly own investment properties. 

If you are currently investing in real estate or if you are thinking about investing in real estate it is important to have a good understanding of how real estate works. You want to make sure your real estate investments can perform beyond your expectations and if you follow some of the simple tips above you should have no problem converting your real estate investment into a money making machine. If you really want to take your real estate investment to the next level, make sure you consider speaking to a  tax professional as they can help decide what is best for you in terms of your real estate investments. Also, if your only current property is your primary residence, you should consider renting out part of your home for some extra money until you can afford to purchase a separate investment property. There can even be some tax advantages of renting out your primary residence for a short period of time. Also, do not forget to pick good tenants because they will end up saving you lots of money and many headaches down the road.

#YUNPLUGGED

Trending