Everyone has at least heard of real estate once. In the world of investing, there are many different models. Real estate property is one of the many investment models. Their rates of return are as high as the profits from stock market. Of course, every investment comes with a certain amount of risk. Investing with real estate is no different from that fact.

How do you start in the real estate business?

Most people would tell you they started by owning their own house first. How can you earn money then? The answer is simple. Take the difference between your total mortgage loan (cost of the house) and current market value (should be higher, as values of properties appreciate over time). This difference is your net profit for your house. This is just one way to earn in real estate. Another reason to buy your own house is also to avoid renting for long term.

The real estate investment model is different from others. Why is that?

It is an investment which you can utilize

Unlike stocks, bonds, or mutual funds, you can always rent out or actually live in your own house. For the former (rental), you can even earn additional income. Therefore, your house is an investment that you can use.

Realize that land is becoming more scarce

In 10 years of time, there would not be as much land compared to now. Therefore, prices of houses (which need land to build on) will appreciate or increase. This is good news for you. The best example would be a country like Singapore. It is only 3 times bigger than Washington city. Prices for houses and lands are indeed very costly over there.

Banks are more than willing to help you

Compared to other investments, your local bank would more likely to lend you money so you can buy a house. This comes in the form of house loan or mortgage. Often times, you can instead use your income for other useful activities instead of buying your house with cash. This is called leverage. When the prices appreciate and you can immediately reimburse your loan in full, when you sell your house. That is one of the biggest benefits of investing in real estate.

Values that you have to uncover

In terms of research, it is much harder to do your homework and analyze properties, compared to other investment types (like stocks, mutual funds, bonds, etc.). That is because other investments have larger number of transactions.

Being a house owner

Of course, owning one house can bring lots of headaches. What if you own more than one? You would have to think of things like housecleaning, rental, being a landlord, property insurance and so on.