How to Invest in Real Estate

Share on facebook
Facebook
Share on twitter
Twitter
Share on pinterest
Pinterest
Share on reddit
Reddit
Blog Blogging Homepage Social Media Network Concept

Real estate is a profitable investment if you know how to do it properly. It requires time, commitment, patience – and a lot of money. The huge profits are found in the big investments such as buying and fixing up homes and selling it for a marked up price or renting out a multi-unit building. 

 

If you are a novice investor, this post will help you get started in your first real estate investment:


  • First, get your finances in order.

 

Before you can get started into any real estate investment, there are a few crucial things you need to put in order that are utterly non-negotiable. They are:

 

  • Put up an emergency fund.
  • Automate your retirement savings.
  • Pay off consumer debt.

 

Real estate investment will require a down payment, so you need to have cash ready to purchase the property and extra funds to use when something goes wrong, which should be apart from your usual emergency fund. When all these are in place, you are now ready to take the next necessary steps.


  • Consider investing in REIT.

 

When you invest in a real estate investment trust (REIT), it will give market exposure without purchasing your own property. An REIT is a company that manages and owns income-generating real estate, which provides investors with the chance to own valuable property assets and have access to dividend income.

 

The most common REIT is equity REIT which enables investors to put together their money so the REIT company can purchase, develop, and manage real estate properties. Some examples of the type of real estate that REITs fund are hospitals, malls, hotels, and apartment complexes. About 99% of the annual rental income is given back as dividends to investors.

 

You can also opt for publicly-traded REITs, such as buying shares through a brokerage firm if you prefer to keep your investment liquid. But if you want greater returns, try to invest in the private real estate market via an online broker. In this way, the online broker helps you invest in real estate ventures without managing them. Based on their goals, investors have a choice where to invest in, i.e., long-term growth, supplemental income, or balanced investing.



  • Familiarize yourself with the local housing market.

 

Get to know the local housing market before investing in a property. Get in touch with real estate agents to get information and seek professional advice. Talk to the locals and find out the profile of the people residing in the area. Analyze and compare prices in the market. Remember that this whole process’ goal is for you to make “informed decisions” on your future property investments.


  • Build a team of industry-related professionals.

 

Real estate investing is a relationship-based business. If you want to be successful with it, you need to build relationships with the right people. Reach out to real estate agents, accountants, lawyers, and contractors and build a team that can help you run your business.


  • Keep your strategy simple.

 

Passive income through real estate investing is possible, and you don’t have to go big for it to materialize. Keep your strategy simple, especially if you are new to the business – always best to start small and maintain low expenditure. With rental properties, the goal is to get it free from debt to gain a low-risk but high income-generating investment that allows you to have the independence to pursue other things that a 9-5 job cannot provide.


  • Purchase a single-family home and have it rented.

 

Renting out a single-family home that you purchased will only work out if overhead costs do not exceed the rental payment. The rental should cover the mortgage, taxes, insurance, and maintenance for it to be profitable. While the mortgage is fixed, rental prices annually increase, enabling you to earn from it over time. There are online sites where you can shop for rentals that allow sellers to list their properties, assist in the buying process, and designate a property manager to the new owner or buyer.


  • Consider “house-hacking.”

 

“House hacking” is when you reside in one of the units of your investment property and have renters from the rest of the units pay your mortgage and other expenses. Other expenses may include maintenance costs, taxes, and insurance. You can keep whatever money is left as savings and use it for your next investment.




  • Try the “condo conversion” strategy.

 

The condo conversion strategy is when you buy a multi-family building, rent the units out, and later convert them into condo units, then sell each unit individually. The main point here is to purchase a building for a lower price and eventually sell for a substantial marked-up price. Some of the benefits are:

 

  • Higher property values
  • Lower interest rates
  • Increased cash flow
  • More favorable loan terms
  • Long-term financial security
  • A greater sense of community
  • Sense of neighborhood pride for individual ownership

 

Generally, condo units appreciate and have a wider market appeal. It sells up to 25% more than community apartments. This makes condos a good investment. The only downside is the initial cost involved in the conversion.


  • Use the fixer-upper strategy.

 

The upper fixer strategy’s primary advantage is buying a property at a below market value and getting a massive return after the renovation or updates. This is one of the easiest ways real estate investors can get started in the business.

 

While it is a popular strategy, it is also a costly and time-consuming approach to investing in real estate. The renovation itself may involve hidden costs if it is not your house flip. Depending on the extent of the property renovation, it will require considerable time to finish. Remember that time here spells as M-O-N-E-Y. The longer the construction takes, the higher the costs get. Costs may involve works on plumbing, electrical, painting, masonry, carpentry, and structural, which are not easy to deal with, especially if there are existing issues that need significant repair. This is why you need to build a team of professionals to minimize cost and maximize efficiency in all aspects. A cash reserve or contingency for unexpected mishaps also proves beneficial.

When you get past this, you will surely enjoy lucrative returns!

90%+ Success Rate

The Best Online Business Model Today

Low Investment, HIGH Returns

See the exact business model, strategies, and dozens of success stories on the next page