Investing in real estate can be a lucrative and profitable venture as properties and physical assets tend to appreciate over time.
There are different ways in which investors can invest in real estate such as through property ownership, management, rental or sale of real estate for profit.
Real estate investing not only enables investors to generate passive income and build wealth, but it also helps them to diversify their investment portfolio which may eventually lead to them having a higher net worth.
On the flip side, real estate investing has its fair share of risks and investors can lose money as a result of factors such as market fluctuations, property damage or loss, tenant issues and legal liabilities.
To get started in real estate investing, it is important to research and understand the local market, financing options and legal requirements in your state or country. It may also be beneficial to consult with an experienced real estate professional so that you're able to stay compliant and on track with your investment goals.
The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning, financial management, and real estate here. More on disclaimers here.
When getting into real estate investing, you can choose to either do it solo or as a group. With solo real estate investing, an investor will typically purchase property using their own personal funds, are solely in charge of property maintenance and make all the investment decisions by themselves.
On the other hand, group real estate investing involves multiple investors pooling their resources together to collectively invest in a real estate opportunity. In such a case, each investor typically contributes a portion of the investment capital and shares in the risks and rewards of the investment.
In the past, group investing in real estate was typically limited to accredited investors until the JOBS Act was passed in 2012. The SEC created new exemptions that allowed real estate investment opportunities to be offered to non-accredited investors.
As a real estate investor, you can adopt different strategies for maximum financial gain. Some common ones include:
Buy and hold is a strategy in which you buy a property with the intention of holding on to it for an extended period of time, typically several years or more. The goal is to generate rental income and long-term appreciation in the property's value.
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It's a real estate investment strategy that involves purchasing a distressed property, renovating it, renting it out, refinancing the property to extract the equity and repeating the process with the proceeds.
This strategy is high-risk and it involves purchasing a property that needs repairs or renovations, making the necessary improvements, and then selling it for a profit. The goal is to buy low, add value and sell high in a relatively short period of time.
A REIT is a company that owns or operates income-producing real estate properties. Investors can buy shares in the REIT, which allows them to own a diversified portfolio of real estate assets without having to manage the properties themselves.
Wholesaling involves finding distressed or underpriced properties, getting them under contract and then assigning the contract to another investor for a fee. The goal is to make a profit without having to take ownership or make any repairs to the property.
This strategy involves purchasing a property and renting it out on a short-term basis, typically through platforms like Airbnb or VRBO. The goal is to generate income from this rental property that exceeds the costs of the property and any associated expenses.
You want to dive into real estate investing but you're not sure if you should go solo or invest with a group of potential partners. Before you make any conclusive decisions, here are some pros and cons of each to help you make a better and informed decision.
If you would like to speak to a licensed real estate agent so that they can advice and guide you through the process, schedule a session with Ila here.
Both solo and group real estate investing can be successful strategies depending on your personal preferences, resources and investment goals.
Solo investing allows for greater control and decision-making power, but also comes with increased risks and responsibilities. Group investing, on the other hand, allows for shared resources and risks, but conflicts may arise as all decisions have to be made collaboratively.
Ultimately, the best approach will depend on your individual circumstances, investment experience and risk tolerance. It's important to carefully consider your options and do your due diligence before making any investment decisions.
Bay Street Capital Holdings is a Black-owned, independent financial planning, wealth management, and investment advisory firm located in Palo Alto, CA. The firm's primary focus is on managing total risk and volatility, with the aim of preserving and increasing total assets and income, rather than solely maximizing returns like many other advisors.
Founder William Huston has over 13 years of experience in supporting the largest retirement plan in the United States, the Thrift Savings Plan with assets worth $650B, and has been recognized by Investopedia as one of the Top 100 Financial Advisors for 2022. Bay Street is the only Black-owned firm among the twenty recognized firms in California.
Bay Street was established to support diverse and emerging fund managers and entrepreneurs, with a goal of advocating for their needs. Ekenna Anya-Gafu CFP, AAMS, based in Scottsdale, Arizona, is a recognized member of Bay Street for his excellent communication, helpfulness, attention to detail, and responsiveness.
Bay Street Capital Holdings was also a finalist in the Asset Manager for Corporate Social Responsibility category among more than 900 firms throughout the United States in 2021. As of now, Bay Street manages $480 million in assets.
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