Real estate investing is all everyone can talk about these days when attaining new sources of passive income or wealth. Once you’ve done plenty of research and decided to start investing with your available funds, it’s only a matter of time before you are able to enjoy the fruits of your labor. If this topic is of interest to you, then keep reading to learn more about how you can get started with real estate investing.
What is real estate investing?
Real estate investing is when you purchase property or, real estate, to make a profit from managing and selling/renting it to other people. There are different types of real estate investments: public real estate investments trusts (REITs) that are commercial real estate, crowdfunding platforms that are very risky but also immensely rewarding, residential real estate like houses, vacation homes, condos, commercial land that can be rented out to businesses, and undeveloped land. Therefore, there’s a vast scope of activities that you can undertake when it comes to real estate investing.
Now, let’s take a look at how exactly you can get started with real estate investing.
How can you get started with real estate investing?
Evaluate your current financial standing and goals.
Before diving into the real estate investing world, you need to have a realistic picture of your current financial situation in mind. Are you barely getting by, or can you live a luxurious lifestyle while maintaining an emergency and retirement fund? Depending on your position, you can formulate your investing goals accordingly. You’ll need to analyze what market you plan on targeting based on the brief introduction of the different types of real estate investments we shared above. Make sure you’re up to date with the latest happenings so that you can create your strategies accordingly.
Create your team.
Real estate investing is not a one-person job since numerous operations are involved. While you can take up these tasks independently, having a helping hand can be highly beneficial since it streamlines the investment procedures and can help take a load off your back. You can partner up with a trustworthy relative or friend who’s also interested in this field, or you can reach out and try to find mentors that are local to your area. It’d also help if you had an attorney that specializes in real estate or commerce so that you have legal support, but when you are just starting it’s fine to omit this.
In addition to all of this, there are several service providers that you’d need to physically take care of your investments, such as house inspectors, electricians, plumbers, pest control, etc. This is all assuming that you plan to take real estate investing seriously.
Test the waters by renting out a room.
If you’re unsure whether real estate investing is the right career choice for you, you can test out this path by simply renting out a room in your house. This is an easy way to dip your toes into being a landlord. This could be for a friend, a relative, or any other roommate with whom you’re comfortable. You’ll also be able to reduce housing costs in this way. And overall, if it turns out that real estate is not your cup of tea, you can vacate your roommate once they find another place and look towards other options for investing.
Try a flip
House flipping is when you buy a property and remodel, redesign, and develop it to increase its value and sell the house at a higher price. We’ve all seen exciting renditions of this activity in television shows, but it’s a lot harder than you might think. You’d need two essential things to start this project: time and money. Flipping houses can be very time-consuming, so this might not be the best option if your current job has long and often unpredictable hours.
Most beginner flipping projects can be funded through loans specifically for rehabs. Now, if you have a creative vision (think Cameron from Modern Family!), you might be exceeding your budget, given limited capital. At this stage, we recommend that you reach out to a trusty associate to be your business partner.
Online investment platforms
Technology is the future in virtually every industry, and the same can be said for real estate investing. There are several reliable platforms, such as Fundrise, Vision, and RealtyMogul, which you can reach out to. These places bridge the gap between real estate developers and investors; hence you’ll be able to receive a return for paying a specified fee sum to the platform alongside your initial investment. So if you’re looking for an excellent place to start with real estate investing, make use of how convenient, informative, and readily available these websites are!
Diversify your real estate investment portfolio
Real estate investing does have some risks so this step is one of the most critical things emphasized in every business lecture by every entrepreneur, investor, and professor. The essence of this tip is that you shouldn’t put all your eggs in one basket. For example, investing in commercial land shouldn’t be your only goal since it’d be a hassle if the commercial real estate market takes a hit and all your investment goes to waste. Instead, try investing in diverse markets, such as a residential house to go alongside your commercial property. Diversification applies more to investors who have been in the industry for a long while, but it doesn’t hurt to have this knowledge when choosing your investments!
Conclusion
Real estate is a significant asset class that can provide investors with a range of rewards, yet, investing in real estate is fraught with significant risk. However, if done with due diligence, you will reap bountiful rewards. For more information, check out some of these books as well as other real estate related articles on the site.
