Real estate investing is an exciting and challenging business that can be rewarding if you’re willing to put in the work. However, it’s also a business that requires a lot of initial capital and long-term planning. If you’re looking to get into real estate investing but don’t know where to start, this guide can help.
In this blog post, experienced real estate investor, Raphael Toledano, who owns a number of real estate properties, will discuss everything from the ins and outs of real estate investing to the different types of real estate investment strategies.
What is Real Estate Investing?
Real estate investing is the practice of purchasing and holding real estate assets to generate profit. According to Raphael Toledano, founder and president of Brookhill Properties – one of the leading New York City real estate investment firms, the best way to describe it is to think of real estate as physical property, but with a different set of risks and rewards. Investing in real estate can be lucrative if you’re able to purchase properties at a discounted or no-money-down price, and if you’re able to make a profit on each transaction. It can be difficult, but it’s definitely worth the work.
How to Invest in Real Estate
There are many ways to invest in real estate, and depending on your particular interests, you might want to look into several different strategies. Some investors purchase foreclosures and flip the properties, while others may purchase distressed properties and then negotiate a favourable deal to sell the assets. There are also investors who purchase rental properties and then lease the units back at a higher rate, hoping to make a profit on the increased rent.
Raphael Toledano focuses on multi-family units. In 2015, through his firm Raphael acquired 16-building multi-family portfolio in the East Village, worth $97 million. The acquisition included 301 residential units and 15 retail tenants. This solidified Toledano as one of the city’s top landlords.
Why Invest in Real Estate?
Real estate investing can be a very profitable business if you’re able to correctly time the market and make good use of correctly purchased assets. Raphael Toledano shares that the key to success in real estate investing is being prepared for the long-term. In order to be successful in real estate investing, you’ll need to have a plan for your investments and be willing to put in the work. If you’re not ready to deal with the long-term nature of real estate, then this may not be the best path for you.
Types of Real Estate Investment Strategy
There are many different types of real estate investment strategies, and they all have their own unique advantages and disadvantages. There are also many different strategies that may be better suited to certain situations, such as when you only want to purchase foreclosures, when you’re only interested in flipping properties, and when you want to build a long-term portfolio of properties. Here, Raphael Toledano discusses each of these strategies in more detail below. For now, we’ll just review the most common types of real estate investment strategies.
Purchasing Equity: This is the most common type of real estate investment strategy, and it involves purchasing real estate at a discounted or no-money-down price and then keeping it until you’re able to sell it at a profit. This strategy works best when you have funds to invest that can last you years, as long as you have patience.
Sell and Hold: This strategy is similar to purchasing equity, but instead of keeping the property, you sell it for cash and then hold on to the asset as a long-term investment. This is the recommended strategy for investors who want to lock in profits from short-term investments such as stocks, bonds, and other market-cap-weighted assets.
Distressed Property Investment: This is a specialized form of real estate investing that involves purchasing distressed real estate. This is usually a reason to avoid, as it’s usually a sign of financial problems and can indicate inability to repay debts. However, some investors have found success with this strategy, and it can be a good option for those who want to avoid the higher risk of investing in real estate with debt.
Conclusion
Raphael Toledano, who recently started providing scholarships to students willing to pursue a career path in real estate, indicates that in real estate investing, you need to be prepared for the long-term. You’ll need to have a strategy for your investments and be willing to put in the work. If you’re not ready to deal with the long-term nature of real estate, this may not be the best path for you.