How to Start Investing In Real Estate
Start Investing In Real Estate
Are you interested to start investing in real estate? The inconvenience is that many new investors don’t know where or how to invest in real estate. So here are five options, arranged from low maintenance to high. If you have rented apartments you surely know how frustrating it is being a landlord. Always getting calls in untimely hours about bugs and overflowing toilets does not seem like the best job.
If the investments are done right, then real estate investment can be cost-effective. It can be another source of earning for you. This source of income doesn’t require you to attend the office every single day. Monthly visits are enough in order to keep this side business running. The problem with new investors is that they don’t know where or how to invest. So here are five ways. These are compiled according to low maintenance to high maintenance.
1. Buy REITs
Did you know you can invest in real estate without the physical real estate? I bet you did not. So, real estate investment trusts (REITs) allows you to invest in real estate without the real real estate.
They are companies that own commercial real estate. For example, they are the owners of office buildings, retail spaces, apartments, and hotels. The real estate investment trust is often compared to mutual funds. Real estate investment trusts are likely to pay high shares.
This makes it a good investment for retirement. Investors who don’t want the periodic income can naturally reinvest those shares. After reinvesting the dividends, it grows its investment further.
The concept of REITs can be complex and mixed. Some trade with an exchange like stocks and some don’t trade publicly. The amount of risk you are willing to take depends on the type of REIT you purchase.
If you purchase a non-traded REIT, it is hard to be sold as its value cannot be determined. New investors are recommended to contribute in publicly traded REITs as they can purchase them from an online broker. IN order for you to purchase, you will need a brokerage account.
If you are not an owner of a brokerage account already, it is not a huge problem. Making an account will only take fifteen minutes. Many companies do not need initial investment. But REIT will require a minimum investment.
Must read – Top Things to Consider When Investing in Real Estate Overseas
2. Use an online real estate platform
There are companies such as Prosper and Lending Club which creates a relationship between borrowers and investors. Investors are interested in lending money to the borrowers for personal needs, for example, wedding, home renovation, startups and a lot more.
These type of platforms connect real estate developers to investors who would like to financially help their project. The investors help the borrowers in exchange for debt or equity.
Investors hope to receive periodic distributions in exchange for taking a risk in financing the platform. Like a lot of real estate investments, analytical and illiquid. Trading stocks are easier than this because in stocks investments can easily be unloaded.
The theory is that you need money to make money. The huge number of platforms limit their investors by only allowing accredited investors. As the platforms limit their guests the transactions made are more legit. In the investment market, a lot of frauds are caught every year.
In order to minimize fraud, this step is taken. This screening helps in making beneficial and legitimate deals between investors and borrowers. This screening is a barrier for a lot of investors as a lot of the investors are not accredited.
Indeed, investing through online real estate investment is a great source of income. But, this source of income comes at a huge price. Again, once you invest in fruitful deal money generates easily.
Read also- Why Real Estate Could Be Your Best Investment Vehicle
3. Invest in rental properties
Renting a place for staying is a good idea. But a better idea is to buy the place you are living in. You have total ownership of the place. If you are a student and you have sufficient fund to buy a property, you should not think twice and buy the property.
This is highly recommended because if you have four rooms in your house but only one is being used, you can put up the other three rooms for rent.
Having strangers as your roommate might not be the best idea but this will help you pay for your other expenses. Once you invest fully in a rental property, the cash flow is regular.
If you are not willing to live with strangers you can buy a place, put the whole house for rent, and then you can rent another house for yourself.
And the money you get from your house tenants can be used to pay the rent for the house you live in. A lot of money is saved when you give up your house for rental, especially room rentals.
Investing in rental properties is one of the best ideas to make a good amount of regular flowing money. Because tenants will always pay rents. Taking these decisions at an early age is beneficial for the future.
For example, you can start saving up a small amount of money from the rents for your higher education. This helps you and your family because a bit of financial pressure will be taken away from your family. So investing in rental properties is a very good idea to enter the world of real estate investments.
4. Fix up and resell properties
This might not be the safest choice but this idea is surely worth a try.
This is a great start for investing in real estate. So first you purchase an underpriced home. Then you shower that home with love and care. Which might me you can renovate the whole house, paint the walls, add new carpets or even fix the fireplace.
But you need to keep in mind that the house renovation cost is not that high. After making the changes you can resell the house or you can put it up for rent. As the place is newly decorated you pitch in for a higher price.
This investment is risky because what if the money you used for renovating is more than the money you receive after selling your property.
The money issue is the main issue in this type of investment. So for your help, you can hire a person who is good with numbers. So that the person can guide you through it.
The person can help you make a decision about how much you should spend on the property and how much you should sell it off for.
The biggest problem that might come up is you holding on to the property. Because if you are holding on to the property you will not get any money generated. So as soon as you are done renovating you should sell the place off or put it up for rent.
As a result, you will have cash flowing into your account. There is another plan you can follow. You can buy the place and then live in it while renovating it.
By this, you can save up the money which you would pay as rent and you can renovate with the saved money.
After renovating fully you can sell the property or give it for rent. This idea might seem like a lengthy process but this surely helps you get a good amount of cash.
5. Rent out a room
You can rent out your room or part of your house. For example, you can rent your room for Christmas. Because during Christmas you will always be at work and your room will stay empty throughout the day if you are a student.
So why not give your room for rent. You can earn a good amount of money in a short amount of time. This might be inconvenient for you at the beginning but this is a great initiative to start investing in real estate.
You can always find people who want places for a short amount of time but they are willing to pay a good amount of money for a homely atmosphere. These humans should be your target audience so that you can generate a side earning without working full time. Money is very important so if there is any source you can earn it with you should take the chance.