Unlike stocks and bonds which are traditionally considered as standard assets, real estate is an alternative asset which up until recently was difficult to access and afford. However, investing in real estate has become increasingly popular over the last 50 years, and today it is a common investment vehicle. Although the real estate market offers plenty of opportunities, buying and owning real estate is a lot more complicated than investing in stocks and bonds. In this article, real estate executive and director of Real Estate Acquisitions & Development at Merchants hospitality, Adam Hochfelder will introduce you to real estate as an investment.
If you’re just beginning to invest in real estate, you’ll find that there’s a lot to learn. As Adam Hochfelder already mentioned in his interview for Social Lifestyle Magazine, because of the financial, legal, and extensive due diligence requirements involved, real estate investing is more complicated than investing in stocks. With that being said, giving yourself a solid education before you purchase your first investment property is more than a good idea, it is an absolute must. When you understand the basic factors of investment, economics, and risk, real estate investing really can be as conceptually simple.
When investing in real estate, the goal is to put money to work today and allow it to increase so that you have more money in the future. The profit, or “return”, you make on your real estate investments must be enough to cover the risk you take, taxes you pay, and the costs of owning the real estate investment such as utilities, regular maintenance, and insurance. It goes without saying that each type of real estate investment has its own potential benefits and pitfalls, including unique quirks in cash flow cycles, lending traditions, and standards of what is considered appropriate or normal, so you’ll want to study them well before you start adding them to your portfolio, states Adam Hochfelder.
As new investors are getting started, there are plenty of wrong moves to make that can cost them both time and money, notes Adam Hochfelder. One of the keys to success for a new real estate investor is to quickly get pointed in the right direction. However, with hundreds of different directions to move, that can be a challenge. So, if you’re a real estate investor just starting out, you need your goals in mind. As you go along this journey, you need to know what kind of investor you want to become and what type of investments you want to try. Even though you’ll learn and understand most things through experience, it is crucial to have a plan before you go in. Your long-term goals will help you stay on track and focused as you learn.