Under the right circumstances and with a strategic approach, real estate investing can yield some impressive benefits, such as tax advantages and an excellent rate of return. There’s generally more predictability than the stock market, and often, the longer you hold onto your real estate assets, the more they appreciate, so looking for the right properties to buy is essential for this and you can get estate agents to help you find great prospects for this.

While real estate investing may seem like an easy investment option on the surface, the time commitment and responsibility aren’t for everyone, especially if you choose to become a landlord.

At the end of the day, certain personality traits are better suited to real estate investing.

• Quick Thinking – It’s advantageous to be a quick thinker. These folks are able to efficiently evaluate buying opportunities, determine the right price for an offer, and get their offer accepted before others beat them to it. Savvy real estate investors avoid investing blindly. Rather, they know exactly what to expect with investing, including income potential, a resale price after improvements, and any tax implications.

• Objective Decision-Making – Real estate investors can’t let their emotions cloud their decision-making. Real estate investing requires a realistic, practical, and clear-sighted mindset. Even if an investor loves a property, they need to first consider the financial side of the deal, ultimately recognizing that if the purchase price is too high, it may be hard to generate a return.

• Strong Sense of Responsibility – If investors choose to rent out their properties, they are responsible for maintenance, repairs and other costs associated with day-to-day living, 24/7. AC stopped? Water heater leaking? Cracked window? The level-headed owner – not the renter – needs to save the day.
• Time and Patience – Real estate investors must be primed to play the long game ­– because it can take years for a property to turn a profit. Even more importantly, investors must have a source of income to foot the bill for maintenance and improvement. One tactic, commonly known as “flipping,” has been simplified by a plethora of reality TV shows. Don’t be fooled by the perceived simplicity; construction can take longer than expected. Investors can encounter obstacles along the way, and without proper foresight, they could end up investing way more than what the property is worth. Especially when it comes to estate in fort lauderdale homes you need an agent to help you find the best.

• Comfortable with Risk – As with any investment, there is risk accompanying real estate. Because the real estate market is cyclical, a property’s market price will fluctuate. When an investor is ready to sell, it might be worth less than what he or she initially expected. Additionally, rental income can suffer during the market’s low points. An investor must be willing to navigate these potential risks.

Successfully investing in real estate is a complex process. Working with a financial planner can help prospective investors outline a practical plan for real estate investing, get clarity on what responsibilities and time requirements are involved, and determine risk tolerance. A financial planner is also instrumental in developing a contingency plan, in case the market turns.

Real estate investing requires the appropriate mindset, approach, and attitude. But when executed well, investing in real estate can be a welcome challenge and deliver sizable profits.

Bill Kelso, CPA, CFP®, is a financial planner* at Pinnacle Financial Advisors, which assists individuals, families, and businesses with financial planning and wealth management in Sedona and the Verde Valley. He is a Registered Representative offering Securities through UNITED PLANNERS FINANCIAL SERVICES, Member: FINRA, SIPC. *Advisory Services offered through SEROS FINANCIAL, LLC. Pinnacle Financial Advisors, Seros Financial, and United Planners are independent companies.