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Whether you’re a new investor or the owner of a diverse portfolio, you likely know that real estate is a popular form of investment. Some may consider real estate to be too risky or have too large of an initial cost. But compared to stocks and bonds, investing directly in real estate has the potential to be more satisfying and lucrative. What makes real estate such a good investment? We believe it has to do with the variety of opportunities and – believe it or not – the price point. Through a mortgage, you can put down $30,000 (or less) and be the legal owner of a $300,000 property. From that point on, the more you pay the more you own, and the longer you own the more valuable your property becomes.
Because of that, we consider investing in real estate a great first step – or next step – for any new or seasoned investor with a desire for passive income.
How Do I Start Investing in Real Estate?
When you think about real estate investing, the first thing you imagine may be owning a rental property. Renting out a property can generate a steady cash flow. Of course, it comes with its own pros and cons. You can qualify for a variety of tax deductions, though at the same time if you manage the property yourself you have the responsibility for maintenance and tenant management. That’s where the uncertainty comes into play. If the unit needs work or a tenant breaks their lease, it’s suddenly your job to deal with it. It can be incredibly rewarding, but without the right help, property management can be more work than many property owners expect.
Compare this to other, less common forms of real estate investing, which include:
- Real Estate Investment Groups (REIGs) where you own multiple units that are managed by a separate company. They offer passive income and appreciation over time but pose vacancy risks and little control over the property manager.
- House Flipping, which could be a great source of quick cash flow if you’re handy and can do the repairs and upgrades yourself. Of course, it also requires an in-depth knowledge of the local real estate market. If you’re flipping houses when the market turns, you could be left holding the bag.
- Real Estate Investment Trusts (REITs), which are essentially dividend-paying stocks, make a good steppingstone for people looking to expose their portfolio to real estate without going through the effort to buy property directly.
- Online Real Estate Platforms that give you the opportunity to invest online in a portfolio of different projects. This is also known as real estate crowdfunding and, though it still requires capital, it’s at a much lower amount than what would go into buying property directly.
It’s a lot to take into consideration. If you’re interested in diversifying your portfolio in this way, some might say to ask yourself if you’re interested in direct or indirect real estate investing. Though more and more the boundaries between these schools of thought are blurring. You can still choose these methods of indirect investing, but it’s easier now than ever to make the leap and invest in a rental property. For those that do, they can enjoy a variety of benefits.
Benefits of Real Estate Investing
If you choose to own a home and rent it out, there are tax benefits that allow you to write off mortgage interest, maintenance, and depreciation as business expenses. You can also take advantage of a property that appreciates 3%-5% a year on average, assuming you keep up with regular maintenance, and you can raise that percentage even more so through the occasional renovation otherwise known as capital improvements. And in renting out multiple properties to multiple tenants you can enjoy a consistent cash flow on a monthly basis. The best part of all is that, if you don’t wish to manage the properties yourself, you can pay a service to do it for you. If you’re investing in a piece of Clark County WA with intent to rent, Zenith Properties NW is there to help.
How Zenith Properties Can Help
As we said before, property management can be a lot of work. If you want the passive income of your real estate investment without the day-to-day hassle of maintenance and finding tenants, that’s where Zenith Properties NW comes in. We handle all the major jobs of a property manager so you don’t have to – from move-in to move-out, inspections and coordinating repairs when needed. We’re invested in, not just our clients, but the people we rent to. Because of that our tenants are almost always there for the long term (on average they stay for 3 years). The real estate market is always changing, and it can be difficult to learn what you need to know to make a sound investment. You can count on Zenith Properties NW to be the expert property manager that can help you manage your real estate investment. To learn more, contact us today!Back to Property Management Services