The rules for real estate investing have changed and here is what you need to know

On April 5th 2012 the rules for investing in real estate changed in

your favor and you probably don't know anything about it. Every

investor likes the idea of investing in real estate. It's safe, easily

understood and backed by the equity in the property itself.

So why are many investors not in real estate now? Two reasons, they

don't know where to start and barrier to entry. Let me explain what I

mean by that. Most of us are conformist. There is nothing wrong with

that. How hard would life be if we kept having to reinvent the wheel.

Most of us are taught to go to school, get a good job, buy a house and

contribute to our 401K.

You know what, this works. It also benefits others as much as us. The college that you paid tuition to benefited from the revenue. The real estate broker that sold you your home earned a commission and the money manager that manages your 401K gets a fee. Many investors do not know that there are other ways to build wealth. They don't know because it really did not benefit anyone to tell them. It's malicious, it's just that humans tend to do what's in their own best interest. Like the broker that sold you on the 401K, why did he not recommend commercial real estate? Because he doesn't get paid to sell real estate. He gets paid to sell you stocks. So what about the barrier to entry part of my premise?

This is where the investor landscape changed forever. Until 2012 you had

to already be a very wealthy individual to invest in real estate. Under the

old rules if you were not already a high net worth investor the regulations

prevented anyone from even suggesting shares of a real estate deal as an

investment to you. Even if they could, the minimum investment would

have been hundreds of thousands of dollars. So what changed?

It's called the JOBS act. It allowed real estate sponsors to approach the average everyday investor with a potential deal. Now your average investor can pool their money with other like minded investors and enter into some of the most profitable real estate investments around. Sometimes for as little as $100. Instead of a real estate deal being funded by only three or four wealthy investors putting up hundreds of thousands of dollars each in some quiet backroom deal, now the deals can be funded by hundreds of investors putting a thousand dollars each. This is now done through portals regulated and overseen by the US. Securities and Exchange Commission. This lowered barrier to entry means that tomorrow

you can go buy part of a shopping center or an apartment complex. So now that you know this let me ask you question.Are you really comfortable with all of your retirement money tied up stocks? After all, they are really nothing more than pieces of paper. A company can go bankrupt and the value of your stock in that company can go to zero. Real estate is land and buildings, and has never gone to zero like a stock can. This is why in my opinion, every portfolio should include real estate.

OK, so you like the idea of adding real estate to your portfolio, what do you do next. Educate yourself. We offer free webinars on real estate investing along with blog posts such as this one. Go to click her and sign up for our mailing list. Read the material, attend the webinars and most importantly ask questions.

John Larsen is the managing partner of Eco7group and has a passion for the environment and real estate investing. He takes great satisfaction in teaching other investors how to be successful. Learn more at eco7group.com