CONTENTS
Guide
Adams Media
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First Adams Media hardcover edition June 2019
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Library of Congress Cataloging-in-Publication Data
Names: Cagan, Michele, author.
Title: Real estate investing 101 / Michele Cagan, CPA.
Description: Avon, Massachusetts: Adams Media, 2019.
Series: Adams 101.
Includes index.
Identifiers: LCCN 2019006890 | ISBN 9781507210574 (hc) | ISBN 9781507210581 (ebook)
Subjects: LCSH: Real estate investment.
Classification: LCC HD1382.5 .C34 2019 | DDC 332.63/24--dc23
LC record available at https://lccn.loc.gov/2019006890
ISBN 978-1-5072-1057-4
ISBN 978-1-5072-1058-1 (ebook)
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From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations
INTRODUCTION
Compared to other types of investments, real estate ranks as one of the most profitable, least risky, and most stable choices (but if part of the fun for you is rollercoaster-like risk, there are real estate investments for you too). No matter whats going on in the world, people need a place to live and somewhere to work, and that means real estate will always be in demand, making it a perfect piece of every portfolio.
When you hear the phrase real estate investing , the first thing to come to your mind may be renting properties to tenants. Or you may think of house flipping, something becoming increasingly popular. Its true that these are types of real estate investing, but theyre far from the only ones. Among the kinds of real estate investing to choose from are:
Real estate mutual funds
Real estate investment trusts (REITs)
Exchange-traded funds (ETFs)
Crowdfunded real estate
In this book, youll learn about all these and more. Youll discover how to take advantage of special tax breaks, choose the most profitable properties, and even ways to start investing in real estate with as little as $50. With so many ways to get started, its easier than ever to begin building your own real estate empirea proven path to accumulating serious wealth without taking on bank-breaking risk.
Whether youre a novice in the art of real estate investing or youve had some experience and want to learn more, this book will be a reliable guide. You may want to become a full-time investor, flipping houses or managing properties. Or you may want to just dip your toes to make some money on the side. Either way, you need the advice offered in these pages.
Welcome to Real Estate Investing 101 .
CHAPTER 1
THE WORLD OF REAL ESTATE INVESTING
Most people think of real estate investing as owning property to either rent out or flip. Theyre right, but real estate investing includes much more, from those physical money-making properties to real estaterelated stocks to real estate investment clubs.
For people who prefer a hands-off approach, investing in real estate mutual funds, real estate investment trusts (REITs), and crowdfunded real estate provides the opportunity to reap rewards without the work and for much smaller investments. All it takes to get started is a little bit of money, some research, and a desire to build wealth.
WHAT REAL ESTATE IS
Land and Buildings
For most people the words real estate probably conjure up houses, but real estate is much more than that. There are dozens of types of real estate, and even more options when you turn to real estate investing. At the heart, though, real estate is made up of land and the buildings on it, as well as anything growing on the land or found underground (such as oil).
Unlike personal property, real property cant be moved, so its value is tied to its geography.
Who Owns America?
According to The Washington Post , 80 percent of Americans live on just 3 percent of the total available land in the United States. The federal government is the single biggest landowner, holding 28.7 percent. Thats followed by the one hundred biggest private landowners, who together own about 40.2 million acresnearly the size of New England.
RESIDENTIAL REAL ESTATE
Most people are familiar with residential real estateits where we all live. Residential real estate is controlled by zoning laws. These regulations define the number and types of homes that can be built in a specific area and may also control things like noise, pets, and whether business may be conducted from a home.
Underneath the residential umbrella, real estate is split into existing homes (also called resale homes) and new construction (never been lived in before). While single-family homes are the most common property in this category, theyre still just one option out of many. Other types of residential real estate include:
Condominiums: privately owned units within a larger structure that is collectively owned
Cooperatives: where individuals own shares of the building and the right to live in their own units
Townhomes: attached houses that may have condominium-style common areas
Multi-family homes: which can hold anywhere from one to four individual units
The two ways to invest directly in residential real estate are renting property (a long-term investment) or flipping property (a short-term investment). You can also invest in these properties indirectly through real estate investment trusts (REITs) and crowdfunded residential rental properties.