Real estate investing is a proven strategy to build wealth and generate passive income for life. However, getting started can be challenging, especially for those who are new to the world of real estate investing and development.
In this article, we’ll walk you through the basics of real estate investing and provide tips on getting started and making money. But first, let’s define what real estate investment means.
What is Real Estate Investing?
Real estate investing involves buying and owning property to generate income or appreciation from your investment. Without a doubt, there are several ways to invest in real estate and gain good ROI, including REITs, often called real estate investment trusts, rental properties, fix-and-flips, and crowdfunding.
That said, if you’re ready to invest in real estate, here are vital things or documents you need to know before investing globally.
What are the documents you must know as a realtor?
As a newbie to real estate investment or a realtor, you must be familiar with a range of relevant documents to the industry. Some of the essential documents that an investor or a realtor must know include the following:
Purchase agreement: The purchase agreement carefully outlines the terms and conditions of a real estate transaction between a buyer and a seller.
Listing Agreement: The listing agreement is a contract between a real estate agent and a property owner that authorizes the agent to represent the owner in the sale or lease of the property.
Property Disclosure Statement: This document is used to disclose any known defects or issues with a property that could impact its value.
Deed: The deed of any real estate property is a legal document or a statement that transfers property ownership, like building and equipment, from one party to another.
Title report: A title report provides information on the legal status of a property, judgments, liens, and other potential issues.
Homeowners Association (HOA) Documents: If a property is part of an HOA, realtors must review the HOA documents to understand the rules, regulations, and fees associated with the property.
Agency Disclosure: An agency disclosure form outlines the real estate agent’s relationship with the buyer or seller and discloses any potential conflicts of interest.
Lead-based Paint Disclosure: If a property was built before 1978, realtors must provide buyers with a lead-based paint disclosure outlining the potential hazards of lead-based paint.
Closing Documents: These documents include the settlement statement, loan documents, and other paperwork that must be signed at closing.
Gazette: A gazette is an official government publication that contains public notices, government announcements, and legal notices.
Gazettes are often used to publish information related to real estates, such as public notices of property auctions, changes in zoning laws, and updates to property regulations.
As a realtor or an investor, keeping up-to-date with any changes or updates published in gazettes that may affect your clients’ properties or real estate transactions is essential.
For example, a change in zoning laws could impact the type of properties that can be built in a particular area, while a notice of a property auction could provide opportunities for buyers to purchase properties at a lower cost.
However, it’s worth noting that gazettes can be specific to a particular jurisdiction or country, and the information contained within them may vary depending on the location. As such, it’s important to be familiar with the gazettes that are relevant to your area of practice and consult with local experts if needed.
Excision: In real estate, excision refers to the process of removing a piece of land from a larger parcel of land. This process typically involves obtaining legal approval from the appropriate government agency or authority, such as the state’s Ministry of Lands, Survey and Town Planning, and obtaining a new title document for the excised land.
Excision is typically necessary when a landowner wants to sell or develop a portion of their property separately from the rest of the land.
For example, suppose a landowner owns a large plot of land and wants to sell a portion of it to a buyer for development. In that case, the landowner may need to go through the process of excision to separate the portion of land to be sold from the rest of the property.
Real estate professionals must be familiar with the excision process, including legal requirements and the potential impact on the property’s value and potential uses. It’s also important to ensure that any excision has been legally approved and documented to avoid any future legal issues or disputes.
Certificate of Occupancy (CofO): A certificate of occupancy (CofO) is an official document issued by the state or local government or building department certifying that a person owns a particular land as stated in the title. In developed countries, it’s a document that shows that a newly constructed or renovated building or dwelling complies with building codes, zoning regulations, and other applicable laws and is suitable for occupancy.
In the real estate industry, as it applies to developed countries, a certificate of occupancy is an important document that confirms that a property is safe for its intended use and can be occupied legally. COs typically cover various building and safety requirements, including electrical, plumbing, structural, and fire safety codes.
It’s important for real estate professionals, including realtors, to be familiar with CO requirements in their local area and to ensure that any property they are involved in selling or leasing has a valid and up-to-date CO. It’s worth noting that obtaining a CO can be a tedious and challenging task in a setting like Nigeria.
It’s important for investors and realtors to understand these documents and how they relate to the real estate transaction process.
However, it’s always best to consult with a qualified attorney or other professional for guidance on legal matters.
Other questions that may be bogging you when investing in real estate include the one below.
Why Invest in Real Estate?
Real estate investment has several benefits, and from big names in the industry like Grand Cardone and others who have made so much from real estate, we can say that real estate has the following benefits.
- Cash flow: Rental properties can generate consistent monthly cash flow without any doubt, which can be used to pay for expenses, save for retirement, or reinvest in other properties.
- Appreciation: This has helped immensely in building great wealth over time, particularly as real estate tends to appreciate value faster, meaning that the property’s value increases. This can lead to significant gains when the property is sold.
- Tax benefits available: Real estate investors can take early advantage of several tax benefits, including property taxes, deductions for mortgage interest, and depreciation.
- Diversification: Real estate investing can provide diversification in a portfolio, reducing overall risk.
Getting Started in Real Estate Investing
- Determine your goals: Before starting real estate investing, it’s important to determine your goals. Are you looking for short-term gains through fix-and-flips, or are you interested in long-term cash flow through rental properties? Understanding your goals will help you determine the best investment strategy.
- Educate yourself based on trends: Real estate investing can be complex, so it’s important to educate yourself before starting. Read books, attend seminars, and seek out mentorship to learn about the different types of investments and strategies.
- Start small: It’s important to start small when getting started in real estate investing. Consider investing in a single-family home or duplex as a first investment. This will allow you to learn the ropes and build your portfolio gradually.
- Build a team: Real estate investing requires a team of professionals, including a real estate agent, property manager, accountant, and lawyer. Build a team of trusted professionals to help you navigate the complexities, challenges, and setbacks of real estate investing.
- Secure financing: You need to have the cash to purchase properties outright to secure financing. Speak with a lender to determine the best financing options for your investment strategy.
- Find the right property: Finding the right property is crucial to success and happiness in real estate investing. Consider factors such as location, property condition, and potential for appreciation. Look for properties in up-and-coming areas with strong rental demand.
- Analyze the numbers: Before investing, it’s important to analyze the numbers. Consider purchase price, renovation costs, rental income, and operating expenses to determine if the investment makes financial sense.
What is the best type of real estate to invest in for beginners?
As a beginner in real estate, take your time with every offer and opportunity that comes your way.
The best type of real estate to invest in for beginners is the REIT, popularly referred to as Real Estate Investment Trust. Investing in these REITs guarantees the safety of your money and appreciation. Some offers are not meant for you but to enable you to learn.
How much does it cost to start investing in real estate?
Starting a real estate business or investment would require little finance/money. Depending on your interest and budget, if your interest and budget are good enough, you can begin with around $1000 – $1,000,000. Some countries and states have theirs to be around $10 – $999; the choice and purpose are yours to decide.
Is real estate a good investment in Nigeria?
Real estate in Nigeria, especially Lagos, Abuja, and Port Harcourt, is a good place to start. Lagos has the highest price plot of land, located on Banana Island. If you need to get genuine land or property in this location, kindly contact me, for I have a genuine real estate company that has helped me acquire properties in this location.
How to invest in REITs for beginners?
This is particular to the country you live in or want to invest in, and it entails reaching out to a bank or mortgage bank to create a brokerage account which usually takes a few minutes or a couple of days, depending on your country. Real estate companies can also help you get this done swiftly.
Key Takeaways
Real estate investing can be a powerful and immeasurable tool for building wealth and generating passive income.
Getting started can be daunting, but by following these tips and educating yourself on the different types of investments and strategies, you can build a successful real estate portfolio.
If you’re looking forward to getting started with real estate, kindly DM me via IG or Facebook. My company teaches offline and online classes for those passionate about real estate investing success.
Remember to start small, build a team of trusted professionals, and analyze the numbers before investing. With patience and perseverance, you can achieve success in real estate investing.