Real estate investment has proven to be a lucrative business—if done right.
While many are clamoring to get into the real estate market, not everyone wants to do the work. More goes into the process than it looks like on the surface, which can be intimidating to beginners.
If you’re not sure how to start investing in real estate, that’s okay! From flipping to financing, here are a few real estate investing tips that can help you get started.
Financing
Financing should be the first thing you look at when deciding on how to approach real estate investing, as it can often determine how and where you invest your money. When looking at financing options, never stretch yourself beyond your means or attempt transactions that you don’t feel comfortable with.
The best way to invest is by already having security in your personal assets and using your investments as additional income. Speak with a personal accountant and determine if investing could be the right option for diversifying your portfolio.
Rental Loans
Getting a rental loan is usually dependent on your income and credit. It’s actually very similar to getting a mortgage loan. However, with rental loans, down payments and interest rates are usually higher.
There are a lot of options for you as an investor. Get more info about utilizing services to help you maximize these loans and help increase your return. They can be great options for those just getting started.
Flips
One of the most popular ways we’ve seen people make income on investment properties is through house flips—thanks to HGTV.
However, flips require a lot of money and don’t always earn as much as you might hear. If done carelessly, you risk a lot of money. Though, if done right, you can make a significant return on your investment.
Make Informed Purchases
When choosing properties to flip and sell or rent, you have to know as much as you can about the property. This includes what work needs to be done, what the market is like in the area, and how you will successfully finance it with little risk.
Buying a home to flip without seeing it in person or having an inspector check the place out can be a risky move with little reward. Ensure you’re making informed decisions about the houses you pick before putting everything into them.
Live in Your Investment Property
One option, if you don’t have much to invest in your rental property, is to live in it while you flip it. You’re often required to live in the property if you list it as a primary residence to get the financing; however, after a year, you can begin renting it out.
If renovations are not extreme and you could live in the home while you flip it, this can give you a time frame to complete it and provide you with a down payment for a new house when you move out.
Just be careful not to get too attached!
Sell or Rent
After flipping a home, you have two options, depending on laws and housing restrictions in your area. You can either rent out the property or sell it.
Renting is a long-term investment that provides a steady stream of income, while selling can provide you with a lump sum but may require more down when you invest in another property.
For more in-depth information on local laws and housing regulations, speak to a lawyer in your area to get the most accurate information.
Rentals
Rental property investment can be an extremely profitable side of real estate investing; however, it requires more work than most beginners understand. Investing in a rental property can take a lot of time to manage. It’s not passive income.
You have to work with renters and resolve any issues with the property. This can not only take time but a lot of effort on your end.
Approach It as a Business
When looking for rental property, many people will look at a place they would want to live in or have already lived. Don’t make it personal.
When choosing a house or apartment to rent out, you must approach the decision as a business transaction. Look at market research, housing trends, and rental rates in your area.
You also have to ensure you’re within proximity or have a property manager close enough to handle emergencies at the property. Rental properties only become hands-off when they’re well-established, and even then, you still have the occasional concerns.
Rent a Room
If you’re looking at investing in real estate with little money and you have space in the current place you’re in, it may be an option to only rent a single room.
Starting small like this can help you dip your toes in the water without getting in too deep. Just be cautious when choosing your renters and ensure you’re going through the steps to ensure you only receive qualified applicants.
This process can involve a credit check, employer reference, and reaching out to prior landlords. Ensure you’re willing to do the work the right way before making any decisions with long-term implications.
If you decide renting isn’t for you, no harm done. At the end of the tenant’s lease, you can simply keep the room for yourself or downgrade to a more affordable home.
How to Start Investing in Real Estate—Made Easy
Real estate is an industry that everyone either wants to be in or just doesn’t understand. With the proper guidance, you can learn how to start investing in real estate, become a real estate investor, and make supplemental income for years to come.
Understanding the market and what works best for you and your finances is the best way to get started.
For more business and finance tips and information, check out our other articles like these!