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How to Start Investing in Real Estate? (2019 Update)

You already know that real estate is a great investment, and you know that you want to add this tangible asset to your portfolio. If you’re like a lot of newer investors, though, you’re probably wondering how to start investing in real estate to diversify your portfolio and bring in more passive income for both the short and long term.

A lot of real estate professionals will tell you that you absolutely must have a full education in the real estate industry before you start investing. If that were the case, you would only see real estate professionals investing in real estate, and that is obviously not the case.

The “experts” do have a point, however. You should not go into real estate investing blind, and you should have some familiarity with the types of investments open to you and the markets you’ll be investing in. However, you do not have to spend two or more years of your life learning all there is to know about real estate before making your first investment.

Real Estate Investment Trusts

The easiest way to start investing in real estate is probably to buy shares in an REIT (real estate investment trust). An REIT employs real estate experts to find and purchase lucrative properties, using the investment capital of people who’ve bought shares in the trust.

With this form of passive investment, you’ll basically be investing in real estate the same way you would invest in the stock market. You buy shares at an optimal rate. Your capital buys you equity in the property or properties that your REIT owns, and you get a percentage of the profits on those properties each quarter. Then, as your shares become more valuable, you can decide to buy more, make a new investment, hold, or sell them.

As with all investments, there is some risk involved with buying stock in an REIT. Namely, you must trust that your REIT will make good investment decisions with your money. If you find an REIT with capable experts who know their markets and are known for making good investments, then you have little to worry about. So, how can you find the right REIT?

Attend Real Estate Networking Events

Whether you decide to devote the time necessary to gain a full understanding of the real estate markets you’re investing in or not, it pays to build relationships within the industry. Attending real estate networking events is a great way to do this, as you can gain more exposure to different aspects of the industry and network with other investors who’ve worked with REITs and real estate investment clubs in your area.

Join a Real Estate Investment Club

Real estate investment clubs are also a great place to begin when you’re learning how to start investing in real estate. A good club will attract quality speakers and will generally charge no more than $200-300 per year. Before you commit to joining a particular club, attend two to three meetings, and get an idea of who the members are. You want to join a club that has a diverse membership, including investors, realtors, developers, etc.

The more diverse the club, the more likely you are to meet and build relationships with the right people there. Also, most real estate investment clubs will offer investment opportunities, much like REITs, but you can opt in or out of these properties depending on whether or not they suit your particular needs.

Learn as Much as You Can About the Markets You’re Investing In

Finally, do as much research as you possibly can on the markets and properties you’re investing in. In real estate investment, you can never know too much, but you don’t have to know it all when you make your first investment. A lot of seasoned investors begin their investment careers with REITs and then branch out to investment clubs, crowdfunding platforms, and direct purchases. The more you invest, the more you’ll learn, and the more you’ll grow your portfolio.

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How to Choose the Best Realty Investment Advisors? (2019 Update)

Investing in real estate does not necessarily require you to be a real estate expert. However, if you’re going to be involved in realty investment in Dallas for the long term – and you should – it pays to have some expert advice and sound recommendations. Even if you are only interested in investing in REITs or real estate investment club offerings, you should know about the markets you’re investing in, or you should have someone on your team who does.

As an investor, you’ve no doubt enlisted the aid of savvy advisors, accountants, and other experts to help you make the best decisions for your portfolio, but when it comes to adding new properties and managing your real estate investment portfolio, it really pays to speak with someone who is specifically experienced with realty. All too often, accountants and other advisors will not treat real estate the same way they do other passive and active portfolio assets, which is why it makes sense to look for realty investment advisors who know what to do with your residential and/or commercial assets to ensure the most growth for your portfolio.

So, how can you find an individual or team of realty investment advisors to meet your needs as you delve deeper into the world of realty investment in Dallas? Follow these tips and ask a few important questions, and you’ll be on the right track.

Network with Other Investors

First of all, if you want to find the best advisors, you’ll want to look to the most successful investors. Go to networking events and/or join a good real estate investing club, and get to know some of the more successful real estate investors in your area. As you get to know and build relationships with these people, don’t be afraid to ask them about who they have managing their funds and who they trust with real estate investment advice. You’ll get the best references from the best investors.

Of course, there are multiple quality advisors and asset managers out there, and you won’t necessarily want to go with the first recommendation. So, as you interview potential advisors, don’t hesitate to ask these questions.

Will You Be Managing My Investments Personally?

A true asset manager will have access to your capital through a discretionary account and won’t need to get approval from you on each and every trade. Some investment advisors claim to be asset managers, but they really just collect a fee from you and then hire someone else to do the actual transfers and legwork that a real asset manager would do.

How Much Experience Do You Have with Real Estate Investments?

Ask them about how they manage real estate assets and if they have a different strategy for managing shares in REITs versus held rental properties. This is a big giveaway. If your potential advisor doesn’t have a compelling answer for this, walk away because they do not have the industry experience you need to manage and maximize your real estate investment portfolio.

While you’re on the subject, go ahead and ask for their Form ADV, which will tell you a lot about their track record as an asset manager. They should also have a risk-adjusted performance record that they can show you, as well, to give you a much better idea of how successful they’ve been with their past clients.

Are You Bound by Law to Always Act in My Best Interest?

Finally, this may actually be the most important question of all as you select an asset manager for your realty investment in Dallas. Some “advisors” will say things like, “You’re the boss!” Then they won’t hesitate to carry out orders that you make that may actually be bad for your portfolio.

To avoid this, ask your potential advisor or asset manager if they are willing to sign a contract that legally binds them to acting in your best interest at all times. This contract will protect both you and them by preventing them from making transactions or giving advice that is bad for your portfolio.

With these tips and questions, you should be armed with the knowledge you need to find a great financial advisor for your real estate investments in Dallas.