How To Understand The Basics of Investing

How to understand the basics of investing.

Educating the Public on Responsible Investment

Learn how to understand the basics of investing. There are two categories that investments fall into, financial/paper assets and real/tangible assets. Financial assets can easily be turned into cash because they can be sold or accessed quickly. Some examples of financial assets are bank deposits, money market accounts, stocks, bonds, and mutual funds. The other category is real assets that include raw land, rentals, or other physical forms of real estate. Real assets take longer to sell and therefore take longer to access cash. 

Some Real Estate Investments Strategies

Investment Risk Pyramid

*The above diagram is used for informational purposes only. It should not be considered as investment advice.

What Does It Mean to Buy a Tax Lien/Deed

A tax lien/tax deed is when someone pays the tax on a property and temporarily acquires it or becomes the new owner. If the rightful owner pays the back taxes, the lienholder earns a very attractive interest rate. If the rightful owner fails to pay the back taxes, the lienholder becomes the new owner. The possibilities can be exciting, but do your research first. You don't want to end up with a bad investment because you bought a piece of sidewalk or landlocked property.

Savvy investors know that there will be a handful of properties being auctioned with 3 times the number of investors. Experienced investors have the upper hand over novice investors because they researched the properties prior to the auction. Skillful investors will usually win the bids on the best properties

Turnkey Real Estate Investing

Turnkey real estate investing is when a property management company resells their property to investors and then manages it for the new buyers. These properties are usually located in low-income, distressed areas. Novice investors prefer turnkey investing because of the simplicity of having someone else managing the property for them.

Trust Deeds

Trust deeds allow investors to act as lenders to builders. It could be residential, commercial, or other forms of real estate. Depending on several factors, returns can range anywhere between 8%-20%.

Investors usually get paid monthly until the principal is paid in full. The loan average is around 9 months, but it can range anywhere from 3 months to 2 years. They are sometimes used to help season the investment before a commercial bank would give a loan at a much lower interest.

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