How To Start Investing In Real Estate, Part 1
Investing in real estate is an exciting endeavor that can be incredibly impactful in your life. Real estate investing is also a big choice – and should be thoughtfully considered.
Like most anything in life that is worth doing, real estate investing does have some risks. However, there are many great benefits, too.
Today, BlueFin Realty wants to share some of the pros and cons of investing in San Jose Real Estate so that you can decide if an investment property is the right move for your personal circumstances.
In this 3 part series we will give you information and tips to help you make an informed decision about real estate investments – before you begin looking for houses for sale in San Jose.
Cons Of Real Estate Investing
As the adage goes: It takes money to make money. One big con of real estate investing is that you may have to have a large amount of money available to you upfront.
For some people, this makes them feel disqualified. However, there are ways for the average person to be able to get a loan with little money down to use in their investments.
The managing of your property may also be a cost, so it is important to be sure the income will outweigh the expenses.
Takes A Lot Of Time
You have to take the time to get into the business of being a San Jose Real Estate Investor. It takes research, effort, and time to do this right.
Once you own property it takes time to make sure it is properly managed. Before you begin looking for houses for sale in San Jose make sure you are willing to give the required time to make sure your real estate investments thrive.
There Are Some Risks
“Risks need to be understood and mitigated as much as possible. Following are a few of the significant risks of investing in real estate:
- Buying the wrong property at the wrong time
- Increased liability for accidents that may occur on your property
- Getting stuck with a “professional renter” who knows how to work the legal system at your expense
- Getting overleveraged. This is a pitfall that brings down many real estate investors. You need to be able to make monthly payments on your debt despite market dips, tenant problems, property vacancies, unexpected repairs, maintenance costs, and other expenses that are part of doing business when investing in real estate.”
Pros Of Real Estate Investing
You Can Build Equity
Equity is the value of your home without the debts owed for it. San Jose real estate investors love building equity.
Building equity is a very big benefit of real estate investing. If you begin looking for houses for sale in San Jose you can begin building equity very quickly like the many other prosperous investors in our coveted area.
Provides A Steady Income
“This is a no brainer! The majority of people invest in real estate for the steady flow of cash they earn in the form of rental income. This passive income is a huge incentive to get you started and buy your first rental property. Depending on the location, you could be earning significant income to cover your expenses and make you extra money on the side.”
You Gain Freedom
For many people, the freedom that comes with investing in real estate is a big factor. Being able to have more say in what your life looks like is very attractive to a lot of people.
When you have more control over your income, you can have more financial freedom. You may be able to travel more, make bigger investments, or set your work schedule. Whatever this looks like for you is your choice, but joining the San Jose real estate market as an investor is sure to bring more freedom to your life.
There Are Some Tax Benefits
Real estate investors often benefit from many different tax deductions. The type of deductions an individual has will depend on the type of real estate that has been invested in.
Some examples of these tax deductions are deferral of capital gains and property tax deductions. You can research the type of real estate investing you are interested in to know the types of tax breaks you may be eligible for.
Appreciation Over Time
The property you own will more than likely appreciate over time. This means that the value of your property will go up over the years. This alone can make you some money.
Often appreciation just happens naturally. However, owners can do some things to increase the appreciation of their investment. One way of doing this is by doing add ons or remodels to your property.
When you understand the potential risks of real estate investing, you can work with a realtor to avoid them. Despite the possible cons, real estate investing continues to be one of the most profitable and consistent ways to make a passive income in our country.