Investing in Real Estate

The most common way to invest in real estate is by purchasing rental properties which is called a long term investment. A short term investment in real estate is when you buy a house, make improvements to it and then quickly sell it for a profit. This is called flipping and it is much harder to do than it was 5 or 10 years ago. The main reason for this of course is the current condition of the real estate market.

Jason Skepyan real estate investing Investing in rental properties can be done a few different ways and they can all be profitable if done right. Having only one or two properties that generate income is a good place to start if you have little or no experience. This will give you time to learn all of the financial details involved in owning rental properties. There are also laws that govern the business relationship between tenant and owner that you will need to learn.

You should also keep in mind that different types of rental properties have different needs. Owning one house and one 15 unit apartment complex will will have different maintenance needs for example. Owning one or two houses will only require one part time maintenance person to do whatever work will need to be done. A fifteen unit complex on the other hand will require one or two full time employees who live on site.

When owning rental properties it is always a good idea to keep up with tax laws and changes in the taxes as they arise. When owning a small amount of income property, the profit margin is going to be small to begin with. If the property tax rates go up a significant amount you may need to modify your current rental contracts. When making the initial contracts for tenants, make sure there are stipulations that cover you financially. One such stipulation that is legal is that you can raise rent in order to keep pace with an increase in property taxes. Keep in mind that you cannot do this in the case of property insurance. The difference being is that you can control your own insurance premiums, but you cannot control the property taxes.

After you get your feet wet with one or two investment properties and decide this is for you, you can easily expand. The best way to do this in order to get started is to form an LLC. This has a number of advantages which include tax breaks and small business loans which enable you to more easily invest in more properties. This type of investment in real estate is especially timely because of the current housing market. Many people simply cannot afford mortgage payments and rent payments can be cheaper. As the owner of the property, you are in the unique position to make sure that this is the case.

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