REAL ESTATE INVESTING FOR BEGINNERS 💰 How To Invest In Real Estate (5 Ways) this video#Best Education Page #Online Earning

how's it going today guys so what we're

going to be talking about today is

investing in real estate for complete

beginners now before I get into the

video I just wanted to mention I've been

messing around with my camera settings

yet again I know I had a couple of

videos that were kind of dimmed because

I didn't have my brightness adjusted the

right way so I think this is good and it

does not make sure you guys let me know

but they should be good uh I did some

trial Clips with it and look at it and

this seems to be a good brightness that

worked so let me know how that looks on

your end anyways just to give you guys

an overview on what we're going to talk

about in this video because it will be

quite long I think I just wanted to

point out what we're going to be talking

about in case this isn't what you're

looking for I don't want to waste your

time here but we're going to talk about

first of all direct ownership and and

within that we're going to talk about

people who buy and hold real estate as

well as buy and flip that we're going to

talk about real estate investment groups

then real estate limited partnerships

and then real estate investment trusts

and real estate mutual funds which kind

of are similar from time goes in under

the same group there but the first thing

we're going to talk about is direct

ownership with the buy-and-hold strategy

so direct real estate investment has the

highest potential risk and the highest

potential reward obviously that's

because you're buying that piece of real

estate yourself you're responsible for

making those mortgage payments and if

you can't get a tenant in there to rent

that property to you're responsible for

making that mortgage payment direct real

estate ownership is not a passive

investment a lot of people try to sell

real estate as a passive income source

and at first if anything buck passes

because anytime you need to make repairs

any time toilets get clogged light bulbs

need to be changed things like that

you're going to be getting phone calls

from your tenants and your Ease are

going to have to call somebody to go

make those repairs or if you're handy

you're going to have to go make those

repairs yourself so if you're not

somebody who wants those late-night

phone calls about toilets being clogged

or furnaces being broken or whatever

maybe real estate direct ownership is

not for you

the thing is though real estate even

with direct ownership can become tacit

once you have enough properties because

at that point it's cost effective to

bring

a property manager but if you're on your

first unit or your first couple of units

it's probably not cost-effective yet to

have property management so you'll be

managing those properties yourself as

well as getting tenants in there and

renting out the property itself so you

do have to consider that when you're

investing in real estate and you're

owning the property itself you're

responsible for all that so at first

it's definitely not a passive income

source the best strategy for a complete

beginner if you're looking to get into

this method of real estate investing

would be the owner-occupant method which

is basically where you would live you

basically buy a multi-family building

maybe a two family or even a period or

four family building you would live in

one of the apartments and rent out the

others the advantage to that is anytime

that you need to make repairs you're

already there and instead of getting

that phone call maybe they'll just knock

on your door you just have to run

upstairs and change your lightbulbs or

whatever it is you have to do maybe

you're gonna like eat and you'll have

good tenants who are going to maintain

the property and treat it well but in

most cases just with talking to people

who do this a lot of tenants will not

treat that place that they're renting

the way they would treat their own home

and they may not be willing to do things

like changing light bulbs or unclogging

toilets or fixing leaks in the drains

things like that so you're going to be

responsible most likely for all of those

things but basically here's how a direct

ownership works a person buys a property

and rent it out to a tenant the tenant

pays the landlord rent each month and

then the landlord pays taxes on the

property the mortgage and the

maintenance with the rest money now

there are three common scenarios

with this the best case scenario is

where the landlord has a cash surplus

each month at that point you have money

left over that you can set aside for

foreseeable repairs in the future one of

the biggest ones is if let's say you

need to put a new roof on the house

that's going to be a lot of money so you

should start saving money for that in

the beginning the common scenario though

is where there's no money left each

month and you're just getting the free

equity because basically they're paying

the mortgage for you so a long term

that's going to be a great investment

because once that mortgage is paid off

you own that property free and clear and

if you decide to sell it at that point

you get whatever it sells for or if you

continue to rent it from that point

forward you don't have to

worried about making that mortgage

payment because you paid off that

property and the best thing with that is

you didn't even pay for your tenants

paid for it now the worst case scenario

which unfortunately is common as well is

that your expenses exceed your mortgage

and the landlord will pay the difference

because you're responsible for that

mortgage payment at the end of the day

and you're going to be having to make it

regardless of the scenario maybe you're

unable to rent it for a number of year

or a number of weeks or a number of

months or maybe there's a lot of repairs

that need to be done because you have

bad tenants unfortunately you're

responsible for that when you're the

direct owner of that piece of real

estate and like I said once the mortgage

is paid off you own the property free

and clear at that point you can continue

to rent it and keep that cash surplus or

you can sell the property get your money

out of it and get all that equity out of

it if the property value appreciates

while you own it the landlord has a more

valuable asset when they sell it that's

why one of the most important things

when looking at these real estate in the

location you want to make sure you're

buying a house in a good area where the

housing market is doing good and

hopefully the value of that house will

go up over time naturally house prices

have gone up obviously except for the

2008 crash housing prices really

suffered there but other than that if

you look at the trends house prices have

generally gone up so they are a good

investment as long as you pick a house

in a good area so like I said at that

point once you once you basically own

that piece of real estate your surplus

is just whatever the rent is minus the

taxes and the expenses on that property

you don't have to worry about that

mortgage at that point now if the

property value that appreciates like we

said it's a more valuable asset for you

and the most important factor is when

looking at a piece of real estate

there's a lot of factors in fact there's

like ten common ones and I'll probably

do a video on that in the future the

best factors as far as what you're

looking at when investing in a piece of

real estate but the two most important

factors are definitely the location of

the property as well as the eventual

rates so you want to make sure you're in

a good location where the property value

is going to appreciate and you want to

make sure that you're in an area where a

lot of people are looking to rent so

there's a high demand for

Bertie's that way you get more for rent

and hopefully you can end up in this

best case scenario where you have a cash

surplus each month now bad tenants can

turn your investment upside down

resulting in negative cash flow this is

very common because maybe they're bad on

the property and they're causing a lot

of damage and you have to paint every

time you change tenants and actually

some states it's a law where if there's

a tenant in there for longer than a

certain duration of time you're required

to paint so you want to make sure you

consider all these things before

investing in this it's a lot more

complicated than people think it is so

you want to make sure you understand

what all the laws are surrounding being

a tenant or being a landlord in your

state or wherever it is that you live

and then like we said property

management is expensive but it may

become cost-effective once you own

multiple units because at that point you

can have that one property manager

represent all of your properties and

they should be able to give you a better

rate because you're offering them more

business at that point something else

you have to consider as well as

landscaping and lawn care and snow

removal those are all things you have to

consider I may be the case where you

have to deal with your tenants where if

they take care of that you knock some

money off the rent or you just have to

contract that out or you end up just

doing it yourself if you're looking to

put your own sweat equity into your

property and do all the work yourself if

you don't mind going over there and

mowing the lawns and shoveling the

sidewalks and plowing out the driveway

then that means there's going to be more

money in your pockets at the end of the

day next we have the direct ownership

buy and clip strategy for investing in

real estate this is basically real

estate traders who buy a property for a

short term old but there's two types of

these people generally you see out there

what I think is more common than the

other but type number one these are the

people that make improvements and

upgrades on the property that's what

equity - the investments by introducing

the work themselves or contracting out

the work and then the problem is is at

the time intensive investments and

typically people who are doing this type

of investment are

able to do one property at a time unless

they have a number of people working

underneath them now the second type of

person who doesn't buy and flip type

strategy is somebody who does not make

improvements but they're investing based

solely on the intrinsic value of the

property what that basically means is

they're hoping that if they hold that

property for a short duration of time

you'll be able to sell it for a higher

price because the market value is not

representing what if the property itself

is really worth so they're buying

properties that they feel are

undervalued and they're hoping that in a

short term period you'll be able to sell

that property for a higher value without

having to make any improvements now I'm

sure you guys watched like those HG TV

specials you'll see like the house

flippers that's exactly what that is the

type one right there people who buy

properties make upgrades and

improvements and hopefully sell it for a

profit

now there's one problem with this and

that is that flippers often do not have

enough to cover months of mortgage

payments which kind of get them into

trouble so let's say you were fixing up

a property and you ended up way in way

over your head and you had a lot more

work than you expected and you set aside

enough money for three months of

mortgage payments and next thing you

know you have to have that house for six

months and fix it up during that

duration of time that might be a problem

if you don't have it up saved up to

those mortgage payments so that's where

some people get into trouble I feel like

the second type is even more dangerous

because if you bought a property because

you felt it was undervalued and it ended

up that it was fairly valued and you

couldn't sell it for any more or worst

case scenario you had to sell that

property for less you could be taking

that loss and that can be dangerous for

you especially if you don't have the

money to cover that loss now the third

type is a real estate investment group

this is where you can own properties

without the hassle of being a landlord

basically how this works is a company

will either build or buy apartment

buildings and then investors buy one or

more units through the company basically

the company that manages the units and

the property for a percentage of the

rent in return so this is good for

people who don't want the hassle of

being a landlord if you don't want those

phone calls at night if you don't want

to worry about renting out the

apartments or dealing with anything like

that you might want to consider a real

estate investment group now the best

strategy for a real

Investment Group is where all the owners

pool a portion of the rent to protect

against vacancies so if somebody who

owns units has a vacancy for a prolonged

period of time they still get their

mortgage payments paid out of that pool

of money collected from the other people

who are owners of units within that

building there may be some that don't

have this strategy in place so if there

was a vacancy for a period of time

you're still responsible for that

mortgage payment on your own so there so

there's a good side to this one is a bad

side of this the good side to this is

that it's a much safer way to get into

real estate because you have the

protection of against the vacancies if

you do have rent collected in the pool

you also have somebody else managing

those properties but the bad side of

this is typically a very high fee

investment because the companies that

own and manage these take a large

percentage of the rent so you're not

going to make as much money as you would

you were a direct owner of that piece of

real estate and what's important to

remember too is a real estate investment

group is only as good as a company

managing it and if you're being managed

by a bad company and they're not getting

good tenants in there and there's a high

turnover unfortunately there's nothing

you could really do because you are part

of that company and part of that group

and you don't really have a say in who

they're bringing in or what strategies

you're using and getting tenants or

whatever so you're really at the mercy

of that company when it comes to a real

estate investment group so that's

something you should consider as well

before getting involved in something

like that but for many people who don't

want the hassle of being a tenant and I

don't want something as passive as a

real estate investment trust which we'll

talk about in a second this isn't really

a bad option but if there's definitely

more might be made if you're a direct

owner of real estate

okay now the fourth real estate

investment strategy is a real estate

limited partnership this is basically

like a real estate investment group but

with an exit strategy essentially what

you're doing with this is you're

actually financing the construction of a

building or of an apartment building or

any piece of real estate doesn't have to

be multifamily you could be anything but

basically how that works is a property

manager serves as a general partner and

that outside investors finance the

project as limited partners at that

point after the building is constructed

investors may receive cash payments as

the

turn on investment so if that property

is generating income that income may be

share to the investors but the lion's

share of the income comes when that

property is eventually sold and then the

investors take a profit because they

were the ones who financed that project

the only downside to this is if that

piece of real estate does not sell from

what's expected or if it's had to save a

hard time selling it you might get run

into trouble with that there but

basically with this you're essentially

financing the construction of a piece of

real estate and then number five is a

real estate investment trust and also

under this is a real estate mutual

project they're so similar I kind of

tighten it together here but this is

basically real estate as a publicly

traded investment this is where a trust

is forms to use money from investors to

buy operate and sell income generating

properties REITs are traded on major

stock exchanges it's just like investing

in a stock and then Rhys must pay out

ninety percent of taxable profits in the

form of dividends to investors so it's

almost identical to a dividend stock but

the underlying investment is actually

based on real estate so this would be

the lowest risk way to get involved with

real estate as an investor but it also

will have the lowest possible yield

because it's so low risk REITs often

represent non-residential properties so

a lot of them actually represent

shopping malls you'll also see

commercial office buildings as well as

healthcare facilities are common that's

what's represented under a REIT and then

a real estate mutual fund is essentially

a diversified pool of these reaps I mean

the last thing I wanted to do here is

that kind of drew a line here to

demonstrate like what the risk is of

each one of these what the potential

income is from these as well as the

liquidity and by liquidity I mean how

easily could you get rid of that

investment if you had to so first of all

direct ownership fall all the way on the

Left here there's the highest possible

return on investment the highest

possible cash flow from that investment

there's the highest risk associated with

that investment because you're

responsible for making those mortgage

payments and this has the lowest

liquidity because it can be extremely

difficult to sell a piece of real estate

especially in a bad market then pretty

much real estate investment groups

and real-estate limited partnerships

they fall kind of in the same place here

they're kind of in the middle here and

then all the way on the right side here

we have real estate investment trusts

and real estate mutual funds these are

highly liquid investments because

they're traded on public exchanges it's

very easy to unload that investment

there's very low risk associated with

these when you compare them to the other

two here or the other three and also

there's the lowest potential return on

investment because there's such a low

risk investment but anyways that's

pretty much real estate investing for

beginners this is like the most common

ways people get involved with real

estate and based on your risk tolerance

you may pick one of these over the other

personally I have not invested in any

real estate yet but I do want to invest

in real estate in the near future and

what I plan on doing is the direct

ownership method because personally I'm

kind of handy I know how to fix stuff up

so I wouldn't be it wouldn't be a

problem for me to have to go fix stuff

or have to fix toilets or whatever it is

I can do basic plumbing left to work

things like that so for me it wouldn't

be such an issue to have to go out there

and be fixing those properties myself

but for other people if you don't want

to do that there's definitely other

options out there and a lot of people

don't realize that you can invest in

real estate without actually owning the

property so that's why I kind of wanted

to make this video to explain the

different ways that people commonly

invest in real estate and there are

other ways people invest in real estate

as well I just kind of wanted to make

this as the most common ways people

invest in real estate well that's pretty

much all I got for this video guys if

you enjoyed it please drop me your like

on this video and feel free to drop me a

comment with any feedback on this as

well as any other topics for future

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always I thank you guys for watching

this video

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