Easing into Real Estate: Five Ways to Get Started

Written by Posted On Tuesday, 22 May 2018 16:15
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Though it’s one of the most lucrative markets around, only 15% of Americans are investing in real estate, other than the home they own. When asked to name their reasons behind not pursuing it, most cite that it’s either too confusing, too time-consuming or too much of a risk. While it might be a complex concept to absorb fully at first, the reality is that real estate investing has the potential to generate significant earnings if approached correctly. The good news is you don’t have to be a finance guru with tons of money in the bank to get started exploring the field. Here are five simple ways to dip your toes into the water today.

 

1. Buy a rental property.

If earning passive income appeals to you, owning a rental property is an ideal way to start. After the initial purchase and any necessary repairs or renovations are complete, you can start renting the home out and acquiring a monthly payment. While the setup can be ideal for a well-maintained property with responsible tenants, keep in mind that as the homeowner, you’ll be tasked with taking care of any maintenance or repair issues that may spring up. While a leaky faucet might be an easy fix, a total roof repair isn’t. To help mitigate this issue, look for an affordable property that’s in good condition and carefully vet all rental applicants before making your selection.

 

2. Flip a home while living in it.

Watch enough home decor and do-it-yourself television shows and you’ll fancy yourself a house flipper in no time. If the idea of restoring charm, beauty and value to a property is up your alley, house flipping can be one of the most rewarding ways to invest in real estate. To keep costs low, find a flipper that you can comfortably live in while performing the upgrades. Why? You’ll be able to take a more hands-on approach to the process and you’ll also avoid having to make a second mortgage or rent payment while you’re at it. The average house flip lasts around six months and can create a hefty payout, so stick with it. Look for properties that are undervalued and under-priced but still have solid bones to work with. Otherwise, you could end up spending years tinkering on a pricey money pit.

 

3. Invest in a multi-family property.

Yes, it’s more of a leap than buying a rental home or a house flip. Yet, investing in a multi-family property, such as a condo or apartment building, can be a solid bet as long as the research done beforehand is extensive. The simple reality is that people always need somewhere to lodge, regardless of how the economy is performing, and the more available options you can offer them, the greater your prospective revenue stream. Like a home flip, consider living in the property while you’re making any updates to it, if any need to be made. Though it might take as as long as a traditional home mortgage to pay off (think 30 years or more), if you invest early enough, once the multi-family property is totally yours, it will pay off just in time for your retirement.

 

4. Consider crowdfunding.

Today, crowdfunding is one of the most popular and fastest-growing ways for someone to reach a goal. Thanks to sites like GoFundMe and Kickstarter, the concept of multiple people pooling their cash together to acquire a common good is one that’s now mainstream. As such, it’s now common for people to put their money together to purchase a large piece of real estate. From commercial buildings to pricey homes, there might be a property that feels out of your reach, but that has incredible earning potential. To this end, you can enter into a crowdfunding scenario wherein you’ll purchase a small “piece” of the property and the rest of the group will do the same. You’ll complete the process using a crowdfunding platform designed specifically for real estate transactions. Before joining such a platform, make sure to vet it first. It should be run by real estate professionals who have the expertise and experience to properly screen investments before listing them online.

 

5. Rent out a personal space.

This option is the quickest way to earn money from a real estate investment quickly. If you’ve heard of platforms like Airbnb, you’re familiar with the fact that today, many people are choosing to rent out a room in their home or even their entire home for a short period of time to generate a little income. If you have a finished basement, an in-law suite, or even an upstairs room or two that aren’t being used, this option might be ideal for you. Best yet, you won’t have to spend money acquiring a new property. The only cash you’ll pay out of pocket is to cover the cost of whatever you need to do to make the space attractive.

 

While there are certainly more ways to invest in real estate, these five are some of the quickest and most proven. If you think this is an avenue you’d like to consider pursuing, talk to your financial or real estate advisor today. You may be surprised at what you can do to get started, even if you’re just starting out.

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