Have you been looking at real estate
and you like the potential for making some money, but you aren't sure
you want to go it by yourself? Well that is a very real concern.
Along with big profits there some comes the possiblity of suffering
some losses if you aren't careful. Starting out you don't know what
you don't know.
Even experienced real estate wizards
aren't one man bands. Some may seem to be that way, but everyone
needs connections to a title company that understand investors,
possibly an attorney, real estate agents – even though most rarely
buy through the MLS, contractors, a source of financing (unless you
are independently wealthy) and, often, a good property manager along
with other supporting characters you will meet along the way. Where
do you round up a team that will help you build your business? This
is a subject for another day but a good place to start is the local
REIA group. Many people there can help you make the contacts you
need. Just keep your eyes open as there are occasionally some sharks
who will be only too happy to help you shed your invesment capital.
One answer for those who aren't quite
ready to jump in with both feet there are several alternatives to
consider. You can look at investor groups and REITs. Each one
appeals to different investors depending on their financial
capability, time availability, and risk aversion – to name a few
factors.
With investor groups, members pool
their capital and, as a group, buy, rehab and manage investment
properties. There are various structures and goals. Some buy and
hold properties. Some rehab and flip them. Some concentrate on
commerical deals. In any case, the newcomer can get an idea of how
things are done. The down side is it would take a chunk of money to
join the group and memberships are not particularly liquid – but
then neither is actual real estate ownership. However you may get a
taste of what is involved and make contacts useful in the future.
REITs or Real Estate Investment Trusts
are corporate entities that allow you to participate in major
projects like shopping centers, large appartment complexes and other
developments. These are exchange traded securities like stocks. This
means that, while investment capital is needed, it's not necessarily
as much as actually purchasing rental property but you don't have the
leverage usually associated with real estate. It also means the
investment is fairly liquid. The down side is that you watch it from
a distance and don't have any educational participation.
Before you decide on either of these it
is important to do your due diligence. For investor groups ask
around the investor community. You may get a variety of answers –
some people don't like competing against groups. However you may
still get some valuable information to guide your choice. Check
public records for lawsuits and that sort of thing. Ask a lot of
questions and don't just go by their answers, but pay close attention
to the way they answer the questions. For REITs – they are pulicly
traided and there is plenty of information available there as well...
it's required by law.
Of course neither of these is that
helpful without some funds to invest. If you have little or none,
try looking into some of the “buy real estate with no money down”
gurus as a possible place to start. Be forewarned that it's not
quite as easy as it is explained, but it can be done – you just
have to look a little harder for the deals.
We will look at some of these concepts
some time in the future. For the time being. if either of the two
opportunities there is plenty of information available. Be sure you
look into them thoroughly before you write the check.
