“Real estate is a great investment” is often said to people looking for somewhere to invest their money. While it’s true that real estate is a good place to invest, oftentimes better than the stock market, it’s only part of the equation. Investing in real estate is one thing; investing in real estate wisely is an entirely different thing altogether. Wise investing takes planning, which includes:
- Identifying the right markets to invest in
- Knowing which type of real estate you want (i.e., single family, multifamily, commercial, other)
- Setting your investment goals
Regarding goal setting, there are a couple of options: invest for cash flow or appreciation. Investors can choose to go for one or both, but there are compromises with each strategy. Let’s take a look at the benefits of each one to understand why.