There are so many options available for investment. From stocks to real estate investing to cryptocurrency, it can be difficult to choose which one is more profitable and most suitable for you based many factors. Such as your current situation, finances, cash flow, capital, and simply other opportunities.
We believe that some options have existed for decades. If people continue to invest in them, it means they are still viable. However, this doesn’t necessarily mean they can work for you.
This doesn’t necessarily clear up your doubts, but it brings many more benefits if you consider an “old” option for your investment to ensure that you feel secure about your decision.
We would love to cover many topics and assist you with any questions in particular, but we are limited to one topic you know well and which many people are curious about Real Estate.
Since the beginning, real estate investors have been around. You should consider more than just being a salesperson and having sufficient capital if you ever thought about becoming one.
We now come to the core question, and that is why you are here: Is investing in real estate worth it? While we will be answering the question right here, first, let’s clarify a few concepts.
What Is Real Estate?
Most people are familiar with the basics, but there is more than just “buying and selling property.”
In order to make it easier for you to understand, we felt it was important to provide a brief but necessary definition.
Real estate refers to the land and any permanent improvements to it, whether they are man-made or natural.
Contrary to what you may think, these improvements do not include common walls and extra sections, but instead elements like water, trees, and buildings.
Keep in mind that real estate is a type of “real property,” completely different from personal property. Personal property is anything that isn’t permanently attached to the ground, like vehicles, boats, jewelry, furniture, and farm equipment.
Thus, real estate is built on land and also includes any elements attached to it. Of course, it also has categories within it, being residential and commercial the most well-known.
Among those real state categories, we also have three other options: industrial, raw land, and special use.
These are the most important details to help you have a better understanding of each one of them:
- Raw land: This is the base on which any type of property can be built. Don’t forget that raw land and undeveloped land can be used for either purchase or rental.
- Residential: This includes structures such as houses, apartments, condos, townhouses, or any other living arrangement that individuals can use.
- Commercial: This category includes land and buildings used exclusively for business purposes. You can find shopping malls, offices, shops, and other similar structures, regardless of their niche.
- Industrial: You may be thinking that this category is similar to the commercial one. However, industries have different activities than commercial businesses and require different land and property.
- Special Use: This is basically a category that includes anything that is not related to the original purpose or need.
How Does Real Estate Investment Work?
We briefly explained what real state is. Now, we need to make sure you understand the investment part, so pay attention as this part is a little more complicated.
Believe it or not, we didn’t fully grasp it at first. As we already mentioned, it isn’t just about selling and buying. Some doubts may arise, but don’t worry; we will help you.
We want this to be simple to avoid any complications for you. Here are the basics.
In simple terms, real estate investment is a type of financial strategy that involves the purchase, management, rental, and sale of real property for profit.
Regardless of which type of real property you have chosen, you must focus on all previous actions. Moreover, the tricky part comes when you actually start to work towards your investment.
There are several ways you can invest in real estate, and all of them share a common characteristic, they depend on economic growth. So, to make a profit, you must learn how the market moves and also be familiar with the economics theme.
A basic rule is that you should ensure that the property you invest in is of higher value than your investment. The property’s value must be maintained at the same cost as its original cost.
What we mean is that you will usually need to deal with any remodeling or renovations that are required in order to increase the property’s value.
Of course, this can result in higher expenses than the property’s actual value, which is a red flag.
Take note that there are many investment properties and more ways to approach an investment project.
To be a good investor, you need to focus on what type of profit you can make and how much.
In order to achieve this, you should specifically focus on what people know as “short-term (quick)” or “long-term profits.”
As a basic explanation, the short or quick way refers only to properties, you plan to sell quickly.
On the other hand, long-term investing means buying property to rent out, lease, and then gaining rent and increasing the property’s value over time.
You are free to choose how much profit you want, and you base your decision on the most convenient option for you.
Remember that it is not the same thing to be a real estate investor and seller as it is to become a landlord.
Generally speaking, the best business idea for you is the one you are most interested in. Just pick one and start working on your investment.
Quick Investment vs. Long-Term Investment
It is crucial to pay more attention to this aspect as you will be deciding if this business is worth your time. If you decide it is, the following information will be necessary.
If you are considering investing in either of these types of property, it is important that you know about these few points:
- Quick Turn Investment.
If you are looking to turn your fortune quickly, you must be familiar with local property trends and values as you will not keep them for very long.
Investors who are able to turn their investments quickly should also be willing and able to act quickly. However, it is clear that good decision-making is essential.
Wholesale or retail are the two possible paths when it comes to choosing an investment option for a profit.
The first one will follow what you already know about brokers, so your role will be very similar to one of them.
In order to purchase a property, you will need first to find it and then sign a contract. Keep in mind that you won’t have to pay any money upfront. The next step is to find a buyer who is willing to pay more.
Your job is to simply assign the contract to the buyer and charge a fee. This way, you make your profit.
The retail option is more popular and which people are more familiar with. Simply put, your job is to buy a property at a low price and then fix it up to make them marketable.
Finally, you sell it to someone who will use it and who is willing to pay what you’ve priced it. It’s a pretty simple process, theoretically speaking.
- Long-Term Investing.
Long-term investors rely on steady growth in rental income and property values over time.
Although you won’t see a profit immediately, it could be more lucrative in the long-term because the profit will be more stable and almost as secure.
You need to make sure that you can rent out the house or build each month to pay your mortgage or receive your capital return.
Your main focus should be to increase the monthly rent to cover maintenance and repairs. This way, you’ll be making a little profit.
In case you want to save money, long-term investment is a great way to do it. The building will pay its mortgage, and it will continue to be maintained by renting out the tenants.
The building can be self-sufficient, and if the investor adds a buffer, it will also generate monthly cash flows.
Pay attention to the market. Before you notice, it can get complicated if the property or building loses its value due to market conditions or other circumstances.
Let’s Answer The Question: Is It Worth It?
Sorry, our intention is not to overwhelm you with all this information. However, it is necessary to recognize that each investment option has pros and cons.
As soon as you internalize this fact, you will easily evaluate these pros and cons. You must understand the overall investment and how you can adapt your capital and situation to it.
Now, we will give you a biased answer to the question. It is well worth it.
Real estate is a very profitable business that will never go out of fashion. Just look around you, and you’ll find that people are constantly looking for better properties.
Think that if you make things right, you can make a lot of money and still have a great time.
This is not the only benefit. Here are some more:
- Passive income is possible.
As a real estate investor, you to find ways to increase revenue and decrease expenses. Forecasting cash flow is an important part of this.
As long as you own your property, this can help you create passive income. If you concentrate on long-term investments, this benefit will make more sense.
In order to keep pace with inflation, it is necessary to raise the rent of your property. You also need to add the appropriate insurance for it. Don’t worry; you can still rent your property at an affordable price despite this.
- Tax benefits can be found in real estate.
Many people are not aware of this. You can actually deduct mortgage interest if you own a home or certain properties. Of course, this also includes local and state property taxes.
Depending on which area you live, operating expenses and costs associated with investment properties may be included in the list.
Contrary to what most people think, capital gains taxes are lower than the personal taxes you must pay. They typically range from 15% to 20%.
Another advantage is that you can also defer capital gains when you use the proceeds of a property sale to buy another property. This is why so many people choose it.
This means that the money was not subject to tax because it was used to buy another property. However, you must not forget to report this to the IRS.
- Your mortgage can be reduced.
This makes your life easier because you have the option to reduce your mortgage when it begins to pay off with rent payments.
This is actually a common scenario for real estate investors. You can rent out the property in the first two months.
- Too much money? This is not true.
People believe that they need large sums of money to get started in this business. However, you actually don’t need to spend a lot because you can still work with mortgages, regardless of how you approach real estate.
You can often put down as little as 8-10% to purchase a property and then borrow the bank’s money to grow it.
- The value of real estate tends to rise.
We have to be honest with you; this can be a very volatile business. However, real estate tends to rise more than the reverse, so it is considered “safe.”
A building will increase in value, and the land it sits on will appreciate over time.
Sometimes land can be worth more than its house or properties built on it. It is not uncommon for land to be more valuable than a house in some markets.
- You can pass real estate to your heirs.
If you are worried about your family’s economic future, real estate is a great way for you to leave a lasting legacy. They will be able to either live comfortably with the money or take it to the next level by continuing the business.
Your loved ones will have an income-producing asset as well as an asset that they can appreciate. This way, your legacy will be more valuable than the money you can leave to them.
Keep in mind that they will have two options to choose from: keeping the property and letting the legacy continue or deciding to sell it and make a profit based on their situation.
- Create your curriculum.
You can still focus on real estate, even if your niche is not listed.
Many people appreciate your market knowledge. Real estate investors are considered to be smart, have a good understanding of the current market, and often get very interested in economic trends. You can get more education without even knowing it.
- It is a Tangible Asset
Contrary to intangible assets like bonds or stocks, a real state is a tangible asset. You can only show a piece of paper when you invest in intangible assets. This paper might be worth nothing if the stock market crashes.
Stock values may fluctuate over time, and there is no guarantee that they won’t fall. However, tangible assets are valuable. If you are short on money and have to sell your investment, you still have the option just to sell a portion of it.
The only downside is that tangible assets are more difficult to sell. You need to go through all the needed legalities and negotiate a deal with the buyer.
If all goes according to your plan, you will walk away with your initial investment and some capital gain in your pockets.
- You Can Leverage Your Equity
Make use of the equity to help you invest in your property by paying down your mortgage balance or renovating it to increase its value.
Just to let you know, equity is the difference in the value of your home and what you owe on your mortgage. Take note that anything less than that is your profit.
This method allows you to take out as much as 80% of the value of your home and invest the rest in real estate.
This is a great way of increasing your portfolio without having to wait until you have enough money to make a 20 – 30% downpayment on another home. It is actually a pretty useful method.
- A Great Retirement Savings Plan
You must never forget that real estate is not liquid. It’s a long-term investment. Thus, you will only see an increase in equity as the years go by. If you are tired of managing so many properties, you can sell some of them when you are near retirement.
This is often called a forced retirement plan. You won’t be putting money aside in a 401K, IRA, or any other type of retirement plan, but you do pay the mortgage each month.
At this point, renting the property should cover all expenses. This way, you can start investing in your retirement, even if you don’t contribute any money.
If you don’t feel secure enough about doing all this process yourself, you should consult your tax advisor before selling your property. This will allow you to minimize your tax liability.
Keep in mind that you don’t get capital gains exclusions because it isn’t a principal residence. However, there are other ways available to reduce your tax liability.
Real Estate Investment: Is everything pink?
Well, we have just presented the pros and the reasons why we support investing in real estate. However, we must also admit that real estate isn’t perfect.
We have been discussing this topic throughout the entire article; each business option has its advantages and disadvantages. Don’t just blindly trust us. Take all this information and consider it if you want to make a decision that you will not regret.
If you still have your doubts, you should consider the following:
- There are no guarantees.
Real estate is known to appreciate in value. However, it’s not always accurate.
You can’t predict the future, so of course, you can’t make any money long-term.
You must be prepared for any inconvenience that may arise. There’s always “something” to happen that could bring down your property.
- You might not like being a landlord.
You can’t focus only on making money. You must be a good person to be a landlord.
You are fully responsible for repairs and any disputes, as well as being available to your tenants in case of an emergency. If you don’t like this part of the business, then you need to think twice.
- It can be difficult to obtain financing.
Consider that you have good credit and a steady income. It is often easy to finance owner-occupied properties, which you will use for residential or commercial purposes. However, this is not always the case.
You need to consider that lenders aren’t always willing to lend money for real estate investments because they don’t see a large and quick profit. Also, the interest rates are set.
The bad thing about this is that real estate investors don’t have many options when it comes to financing. You must rely on your own capital or central banks.
- Cash flow is not guaranteed.
This point is debatable. What we mean is that it is not impossible to find tenants for your property or sell it at the price you desire.
However, if your tenant is unable to pay rent, the mortgage and any other expenses will be due. A mortgage is a commitment to pay the mortgage even if you don’t get rent. This will put you in a tight spot.
The Verdict: Should You Go For It?
It all depends on your situation and potentials. To begin with, it will be extremely difficult to get financing if you don’t have good credit.
Real estate investing is not as risky as it sounds despite its cons. Keep in mind that before you can become an expert on a property, you will need to experience many properties. So don’t be get discouraged if your first experience is not as good as you thought it would be.
Real estate is worth the investment, based on these facts. It is a proven investment. The industry is full of investors, but it’s not difficult to get a spot despite that.
It’s important to review all the previous information. Make notes and decide if you are able to handle the basics: Finance, common requirements, what you can afford, and how much you can invest. This is the key to your future success.
Once you have a clear idea, try coming up with reasons why you “should not do it” and compare them with reasons why “you should do it.”
We recommend that you only target small properties and investments to “practice” before you make your first big investment. We know that you always want to aim big, but practice makes the master. Be wise and take your time.
There are a lot of courses and lessons that you can take in order to improve your skills. Information is a powerful weapon and the most useful tool when starting a business. Go for it.
The Local Lead Generation Process for Your Real Estate Investing Business
All right! So, everything is about building properties and generating leads. But how does the process actually take place? Are there other steps I need to know?
The steps I mention below are what students from our local lead generation program follow to generate leads for businesses like yourself. So I’ll help you see what we do. And how if you join our program, you can simply generate leads for your own business (unless you want to start a side hustle and build a laptop lifestyle business).
Essentially, our lead generation can be divided into four steps:
The first is prospecting. You need to take the time to do market research on a niche (industry) and determine how many phone-driven businesses are there.
Keep in mind that this is local research as you need to know how many companies need leads. For example, you may search for “plumbing services Youngstown OH.”
You will find dozens or even hundreds of businesses trying to get themselves in front of the customers by ranking on Map Listings, organic results, and even Ad.
The second step, building. When you find a niche (plumbing, tree services, a software company, real estate…), you will need to start building your digital properties. You don’t need to be an expert in HTML or coding. It can be easy with the right tools.
The third step is now taking time to rank your lead gen website. With the site done, you need to work on SEO strategies and start dominating those Google search results. If you’re new to SEO, it stands for Search Engine Optimization.
To keep it simple, it consists of the entire process of growing a company’s visibility on search engines like Google and generating organic traffic. And remember this, local lead generation is part of the strategies.
Moving on to step four, once you rank the site, you will start getting your ROI and profits. You only need to rent it out to a local business interested in the leads the site generates. You can offer a couple of free leads to their move on with the actual pay per lead.
To review steps 1-4 above, I described it to a normal student who is building a lead gen business to help local service providers generate more calls. But replace the student with you as the business owner. And replace sending the leads to a business to simply siphoning the leads to your personal business.
By the way, fun fact, about 20% of our students in our local lead gen program are actually business owners who went through the program. And they use the skillsets we teach to generate leads for their own business.
An Example of Lead Generation: Home Advisor
You must be thinking, “if lead generation sounds so good so far, how come I haven’t seen any company?” That’s the thing; there are many out there. You just don’t know they are dedicated to it.
HomeAdvisor is one of the best examples you can find on the Internet as it is a top lead generation company that has spent millions building its brand but also earned even more zeros for this same reason.
They started small as everyone else but invested in building their brand awareness to make people who are looking for home services go to their website and find what they need. They are over 75% of people’s first choice when they need those services.
If you don’t get HomeAdvisor that much or need a refresh, users need to submit their information to request a service and get a professional or expert who can provide it.
HomeAdvisor’s job is to share your information, which makes you a lead, with local companies so they can contact you and offer the service you’re requesting. For sharing this lead information, HomeAdvisor gets paid by the companies. This happens for every single lead they send to multiple businesses.
Business owners who don’t have marketing skills or don’t even know how to have any online presence will always rely on those pages to list their services. They will save time and effort, but companies like HomeAdvisor can make them spend lots of money as leads aren’t exclusive (one lead is sent to multiple companies after all).
Using Facebook Ads aka Paid Ad Platforms: Do They Generate Leads?
They DO generate leads. If not, no one would use them.
However, you need to remember two facts:
- Paid ads or platforms can be expensive.
- They don’t generate “natural” leads.
Whenever someone sees or clicks in one of those ads, over 80% of them did it by accident or are trying to close/report it.
Why? Because they aren’t looking for those services. At least not at the moment.
What those ads do instead is interrupt their time on the platforms. Users aren’t there to find companies or businesses unless they are searching for a specific company’s user, and for that, there’s a search bar. This is why it is hard to convert them to actual customers who will show interest in the companies’ services. Also, you’re limited by a budget.
When using lead generation, everything is organic. You aren’t forcing others to pay attention to your business but rather being there when they need you. This is why Google’s organic traffic will always beat paid ads, and the reason companies continue investing in it, which is a lot cheaper as well.
What Is Local SEO?
Don’t worry… I didn’t get it at first either. Following the short explanation, local SEO focuses on scaling businesses’ visibility on search engines. However, this is only for those who serve their communities face-to-face.
What does this mean?
Experts and professionals like painters, plumbers, and dentists (but not only them) offer their services to their local customers. Why? Because they can’t deliver them unless they are located in the same area of their customers.
To make sure those businesses get more leads, you need to rank them locally by claiming the business listing on Google to place them on Map Listings. Local SEO also involves online reviews, citation management, and how you manage your entire online presence in the local area.
If you are going to bet on lead gen, you need to adapt yourself to today’s world: The Internet.
Keep in mind that although traditional channels and methods like billboards, warm calls, and pamphlets still work, they aren’t part of your tools. Whenever someone needs a service, they go to Google and search for it.
“Dentist in Miami” or “plumbing services in Orlando,” etc. And you can keep coming up with services or professionals people need and look for. Thus, you need to make sure you’re using Google to get the companies in front of their clients.
Users will always click on the first search results (those near the top), and many of them will be either Ad links (people paid to place their websites there), Map Listing, and then you get websites. Almost all of them are your goal and where you should always aim to place yourself.
Can My Real Estate Investing Business Utilize a Local Lead Generation Strategy?
If you want customers, you better know you need it. Following the previous explanation, lead gen is all about placing businesses in front of their customers, choosing them over their competitors.
Put it simply – it’s all about closing deals and having clients for those companies to make money. The main difference with the usual methods companies use for this is how lead generation approaches different channels to get them in the right place of the market to get customers.
Those channels are all focused on the Internet as most people are searching for products but also services across the net. The issue is that the Internet is way too broad, and businesses don’t know how to place themselves. They usually try, but they get one common result: losing money and time.
How Powerful Are Organic Real Estate Investing Leads from Google?
For companies looking for customers, it’s everything. For you? Pretty much the same. When you build a business with digital properties, you get to make thousands of dollars a month.
This isn’t a “get started today and get rich tomorrow” thing, but it is HIGHLY scalable, and ROI + positive results are guaranteed. Learning a fairly decent and very needed set of skills to create your digital properties and start ranking them on Google is required.
I have invested in several online businesses over the years, and if there’s something uncertain, whether you will get your ROI or not, even more than the actual profit.
However, this business moved my earnings from five figures a year to a month in ONLY passive income while sitting comfortably at home.
On my laptop. Anywhere. Anytime.
You can look at one of the first sites I built back in 2016, and it continues making me over $1.000+ every month. The best part is that I don’t need to touch it or the rest I’ve built over the years, just like this digital property.
What Makes Lead Generation SO Alluring?
Here it goes: you can work from home.
The main issue with regular business opportunities is how much you need to invest in staff, equipment, or rent to have a place to sell your products or offer your services.
We all know the hassles of traditional businesses that involve regular expenses, which are extremely high. Can you afford it? I don’t think so, and even if you can, is it worth it? Now, it isn’t only about the money. You also need to put in a lot of work, and it isn’t only during the first couple of months or years. Usually, it is as long as you continue running it.
You can save yourself those headaches and bone-breaking tasks and expenses with lead gen since it is more about generating leads with digital channels—mainly websites.
Websites can be VERY cheap to build, and with many tools online, you get to do it in a couple of hours instead of days. Any virtual or digital business is scalable and won’t need constant maintenance.
So, let’s summarize this:
- You save money in regular expenses with traditional and most online businesses as what you need is yourself and digital properties (websites).
- You can bet on passive income.
- There’s no need to hire more people to get started.
- You can generate leads in multiple industries, which allows you to work on any niche you want.
How Can I Get Started in the Local Lead Generation Program?
Anyone can start and learn. That’s the beauty of this business model. I knew nothing about SEO, Map Listing, and everything I’ve mentioned so far. It is all about learning the skills, gaining experience, and deciding to take the step.
Remember that this business model will never get old as business owners are always looking for leads. They need to do business and scale their companies. Why not do the same while helping others and still making money?
You can start with this local lead generation course highly recommended for anyone wanting to grow in the business. It is a close training that will take you through each step and make sure you are able to get your ROI, profits and take control of your life.
You will be added to an incredible lead generation family ready to help you 24/7 when asking questions on the group. Anyone is welcome who’s willing to put in the work. Click here to watch the lead gen webinar.