Your Little Book of Real Estate Investment: From Direct Investment to Real Estate Stocks and Crowdfunding

By Johanna Wychcote

Plenty of books will tell you how to invest in specific types of real estate - how to do a house flip, how to run an apartment block. This book, instead, describes all the different ways of investing in real estate and helps you work out which is right for you. It also explains the business basics; how to value properties, how to value REITs, how to get started in crowdfunding. It also identifies the top traps that lose first-time real estate investors money.

• Language: English
• Publisher: Practical Press
• Release date: Mar 12, 2022
• ISBN: 9798201318031

Johanna Wychcote

Johanna spent twenty years working in finance before quitting to go it along before she burned out. She's built her own investment portfolio and a small real estate business, and now writes ebooks on investment topics as well as spending her spare time painting watercolour landscapes.

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Your Little Book of Real Estate Investment: From Direct Investment to Real Estate Stocks and Crowdfunding

Johanna Wychcote

Published by Practical Press, 2022.

While every precaution has been taken in the preparation of this book, the publisher assumes no responsibility for errors or omissions, or for damages resulting from the use of the information contained herein.

YOUR LITTLE BOOK OF REAL ESTATE INVESTMENT: FROM DIRECT INVESTMENT TO REAL ESTATE STOCKS AND CROWDFUNDING

First edition. March 12, 2022.

Copyright © 2022 Johanna Wychcote.

ISBN: 979-8201318031

Written by Johanna Wychcote.

Also by Johanna Wychcote

Investment for People who Don't Want to Talk about Finance

Your Little Book of Real Estate Investment: From Direct Investment to Real Estate Stocks and Crowdfunding

Your Little Book of Asset Allocation: Everything You Need For Worry-Free Investment

Your Little Book of Dividend Investing: How To Get Rich Slowly

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Also By Anne Haclyffe

Johanna Whichcote | Your Little Book of Real Estate Investment: | From Direct Investment to Real Estate Stocks and Crowdfunding

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About the Publisher

Johanna Whichcote

Your Little Book of Real Estate Investment:

From Direct Investment to Real Estate Stocks and Crowdfunding

Most books on real estate are written by investors who have had immense success with their business plan, and they tell you how to replicate it. In this book, I'll start from a different perspective. There are many different ways of investing in real estate, and the most important thing is to find the right way for you.

You'll need to take account of your particular skills. For instance if you're a building contractor, you have a huge advantage in looking at property for refurbishment. If you work in finance, you may have the right kind of mind for finding good finance deals that can add several percent to your rate of return, or you might decide to concentrate on trading REIT funds rather than investing direct in real estate.

You also need to take account of your financial needs and situation. For instance, if you have a few hundred dollars a month to invest, buying a rental property would be a stretch, and exposes you to a high risk if your tenants don't pay their rent and you're unable to make your debt payments. Instead, you might consider investing in REITs on the stock market, through a zero cost broker like Robinhood or Sofi.

If, on the other hand, you have a lump sum to invest (such as from an inheritance or the sale of a business), you have more options. But you'll need to think about whether your prime need is to create a recurring revenue stream, or to invest for capital growth. You might take quite different approaches depending on your reasons for investing.

Finally, you'll need to decide whether you want to make this a business, or whether you want to keep real estate as simply one of your investment options. Many books set out to make you into a real estate tycoon, by multiplying the number of properties, using high amounts of leverage, and so on. However, this life isn't for everyone. You may love your career as a medic or a lawyer, or a craft brewer or street artist, and just want to have your money working actively to protect and increase your wealth. And there is nothing at all wrong with that!

So this book is not about how to invest in real estate - though it will give you some ideas and skills. It's about choosing which way of investing in real estate will work best for you.

Let's start sensibly

Real estate agents often say Buy the best property you can afford. And they're wrong.

Of course, they also have a vested interest in selling you the highest priced property they can, because if they're working on a percentage commission, they'll get more money that way.

But the real reason that they're wrong - particularly when you're starting investing - is that your first property is the one you're going to make a whole load of mistakes on.

You'll underestimate how much it will cost to refurbish.

You'll miss a problem like rot, or a roof that needs replacing. There goes 20% of your budget.

You'll buy a property that is just a little bit too up-market to rent easily in its neighborhood, or is in some other way atypical, without realizing it.

Planning permission or building permits took too long to come through (or you didn't realize you needed them).

Your contractors will slip in a few changes to specification, or you won't specify the final quality well enough, or you won't get the desnagging done properly.

You won't have as much time to devote to the project as you think.

You place an order for replacement windows, and it gets delayed by six months due to materials shortages.

One of your contractors will... not get invited back. That's the politest way to say it!

So I would recommend that if you are investing directly in property, build in a really big margin of error for your first deal. If you take a year and a half instead of six months to finish the job, if you overshoot your budget by 20%, and you have to reduce your rental price by 10%, are you still financially okay? That is, you may be losing money, but will the problems put you under severe financial pressure? Or will you be able to cope?

If you don't have the money to invest directly in real estate, but you're buying REITs or crowdfunding, again, consider your total risk and the fact that your first few placements might be suboptimal. Start with small investments in a number of companies rather than one big investment. Then, if you have hard lessons to learn, at least you won't lose your whole portfolio with a single disastrous investment. And remember to keep a small amount of ready cash in the bank; you may need it to pay for emergencies (medical, legal, the roof of your house falls in, whatever), or you may need to have