Beginner's Guide to Real Estate Investments
Just like in monopoly, if you make a bad investment decision, you can lose money on your
Hi, my name is Jon and Im an independent investor from Kansas City and Im going to share with you a beginners guide to real estate investing, on About.com.Real estate investing is much like playing the board game monopoly. The basics of the game are to buy property and generate income through those investments and buy even more property. Your investment goal is to buy properties, make enough profit or return to cover the risk you take, the taxes you pay and the cost of the real estate investment. However, just like in monopoly, if you make a bad investment decision, you can lose money on your properties or even go broke.As with any investment you need to manage your risk. In general you are looking to make money in a couple of ways although there are other ways to make money. But starting out, the two main ways of making money are real estate appreciation and cash flow income.Real estate appreciation is when the property becomes more valuable due to the change in the real estate market. Essentially, the land around your property has a greater demand so people will offer to pay more for the property or there is starting to be more development around your property so it is becoming more attractive to other buyers. Real estate appreciation tend to have more risk because you are trying to predict what the future value of the property will be whereas cash flow income is by buying real estate for the purpose of creating a stream of income from the rent. This type of investing may reduce your risk because you are receiving an income on a regular basis. Cash flow income can come from a variety of investments such as: Houses, apartment buildings, office buildings and storage units.As with any investment, managing your risk is priority number one because property values can go down if your real estate market as a whole goes down. Also, because you are owning actual property there is the cost of maintaining the actual property as well as covering your actual purchase cost as well as utilities and insurance. Thanks for watching and for more information on stocks and investing, be sure to check us out on the web at About.com.