Real estate investment is an excellent way to make money. For some people, real estate investment is a primary source of income. For others, real estate investment is a hobby. If you're thinking about getting into real estate investment, here's what you need to know.

For informational purposes only. Always consult with a financial advisor before proceeding with any real estate transaction.

Different Types of Properties and Investment

There are many different types of properties and investment, but in general, real estate can be divided into one of two categories: residential and commercial. Understanding the differences between these two types of investment can help buyers get started with the investment process.

Residential Real Estate

Residential real estate can take different forms. An investor interested in residential real estate must decide whether to get a single family rental property, multi-family apartment or a fix-and-flip home.

Single-Family Rental Properties

Single-family rental homes are an easy starting place for beginning investors. Single-family homes are among the most affordable form of real estate, and for individual investors, they are the easiest to maintain. The biggest down side of rental homes is that they only make money when they have a tenant. As soon as a tenant moves out, the owner loses money on the property until someone else moves in.

Multi-Family Apartments

These properties tend to be larger and more expensive than single family rental homes. However, they're often more profitable. As long as one unit remains occupied, the property will still bring in some income.

Fix-and-Flip Properties

Fix-and-flip properties are excellent for buyers who have the ability to make their own home improvements. The best way to make money with a fix-and-flip property is to buy the property for a low cost and sell it for much more. For this reason, it becomes very important for the buyer to work with a good negotiator when buying and selling.

Commercial Real Estate

Commercial real estate is often more costly than residential real estate. Buying a commercial building takes a large down payment and a large loan as well. Understanding the difference between the different types of commercial real estate can help potential investors decide which one is right for them.

Retail

Retail space is heavily dependent upon location to be successful. A property owner who owns a retail store in a prime location may make a lot of money. However, retail property owners must spend a lot of money to keep the property in good condition, or the property may begin to lose business.

Office Space

Office space is often an excellent investment, especially in locations where the economy is strong and there's a big demand for office space. Office spaces tend to be especially profitable because, even when one tenant moves out, the building will still continue to make money as long as there are still tenants in the other units.

Industrial

Industrial locations can bring in a lot of money, especially if the landowner is willing to make modifications to the site to accommodate the tenant's particular needs. However, when a tenant moves out, it is sometimes difficult to find a new tenant. Since these sites only hold one tenant at a time, property owners must be able to stay afloat in times between tenants.

Getting Started

Once the Meadowwood home buyer knows which type of real estate investment is right for them, there are still many steps to get started with real estate investment.

Save for the Down Payment

Real estate investors are usually required to pay between 20 and 40 percent for their down payment. Sometimes if coming up with a down payment is difficult, investors will pair up and combine savings for a down payment.

Do Extensive Research

Investors should be well informed before they get started with investment of any kind. They must know where to buy, what to buy, how much to spend and should have a strategy for making profit on their investment.

Get a Loan

Once the investor has the proper down payment and has a business plan, then the investor can get a loan. This is done by contacting a lender and discussing loan packages.

Work With a Real Estate Professional

Real estate investment can be rewarding and exciting. For someone who has an adventurous spirit and who likes to reap the rewards from their hard work, real estate investment is an excellent business venture.

If you're thinking about getting into real estate investment, contact a real estate professional in your area. Your real estate agent can help you identify which type of real estate investment is right for you, and then can take you to various properties to be considered for investment.

For informational purposes only. Always consult with a financial advisor before proceeding with any real estate transaction.