Tuesday, 21 November 2017

5 Ways to Create Income with Real Estate

Written by Posted On Tuesday, 14 November 2017 18:50

When done right, real estate investing can create income to help grow your wealth. But if you’re considering your first investment, you might not have a clue about where to start. You’re not alone, as seventy percent of Americans avoid investing in real estate because they think it’s too complicated. A new investor does have a lot to learn, but there are some simple ways to get started.

1. Re-sell Property

Do you enjoy repairing homes? If so, then “flipping” might appeal to you. House flipping is when you buy a low-priced home that needs repairs. You repair the property for as little as possible, and then resell it for a profit.

It would help to have an experienced partner during your first project. But perhaps you’re not hands on, and would rather hire someone to do the work. Find an experienced contractor who is excellent with managing projects and estimating repair costs.

An alternative is to buy an undervalued property in good shape. Hold it for three or four months and sell when the value increases. But keep in mind there’s a chance the value will not increase.

2. Invest in a Rental Home

If you own an empty home, then you can rent it out to a tenant. You can also buy a home for rental purposes. Ideally, you’ll make enough from rent to pay your mortgage and turn a profit. But it’s possible the rent will be lower than the mortgage, depending on rental prices in the housing market.

Insurance is a must if you plan on renting to a tenant. Your home is a big investment, and insurance provides important protection for the property. Get home insurance quotes to help find the best policy. You will likely need rental home insurance, which provides coverage for things such as the home’s structure and damages inside the home. The tenant’s belongings aren’t your responsibility, but you can suggest they get renters insurance.

3. Invest in Real Estate Investment Trusts (REITs)

Investing in a REIT is similar to investing in the stock market. You buy shares in a corporation that purchases and rents property with the money. You receive a portion of their profits, and you can sell your shares when the value increases.

Thoroughly research the REIT before buying shares. Review their equity and mortgage properties to determine if the investment is worth the risk. Some REITs invest primarily in mortgage loans while others focus on equity investments. REITs that focus on mortgage loans tend to be more risky.

4. Join a Real Estate Investment Group

If a REIT is too risky, then consider a real estate investment group. Instead of buying the property on your own, a company buys or builds an apartment or condo. The company then allows you to buy one or more units in the building. When your space is rented, you share the rental income with the company.

The benefit here is the company manages the building. They are responsible for finding tenants, collecting rent, and doing maintenance. This relieves you of the responsibility of being a landlord.

5. Become an Airbnb Host

Airbnb operates an online marketplace that allows hosts to list short-term housing. In exchange for this service, Airbnb receives a commission from hosts and guests. Hosts can rent or lease rooms, apartments, or homes to short-term tenants. You determine the rent, and can set various prices for monthly, weekly, and nightly stays.

Some cities have regulations concerning short-term rentals. A list is available containing these rules and regulations for cities within the United States. Hosts are also advised to insure their property against vandalism and theft before accepting tenants.

Research Your Options

You can possibly have success with real estate investing. The potential is there, but success is not a guarantee. Thoroughly consider the risks and benefits before making any decisions.

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Carol Evenson

Carol is a home renovation specialist with a background in organization and sales. She assists realtors with business management and growth.

https://twitter.com/cmill_com

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