Around 90% of the world’s millionaires in the last two centuries have gotten to that level by investing in real estate. Real estate is one of the best ways for average investors to develop wealth. However, investing in real estate is a process that takes time and effort.
The best thing you can do for yourself when investing in real estate is to start early. Give yourself time to improve and gain more investments gradually. It’s also essential to understand there are multiple types of real estate investments.
You should be familiar with the best ways to invest in real estate to ensure success. In the guide below, you’ll discover a list of real estate investments to consider before deciding which is the right option for you. Continue reading to get started!
1. Buy a Primary Residence Home
Before you start purchasing properties for renters to reside in, you need to buy your own primary residence home. To purchase a home with no cash down, you can look into a VA loan or a USDA loan to see if you qualify. Live there for at least one year before moving out and using the home as a rental property.
The requirements for a down payment and a credit score are not as strict when buying a residential property as they are when purchasing an investment property. Therefore, this is a good way to get started while avoiding higher fees and stricter terms. Make sure you’re prepared to live in this home for a minimum of one year, though.
During this time, you can conduct research and learn more about becoming a real estate investor to better prepare.
2. Invest With Others
If you want to invest in a bigger real estate deal, then you can invest with a group in either large residential or commercial properties. To invest in larger real estate deals, you can real estate investing platforms online. Investing with others allows you to contribute a low minimum, such as $500 to be a partial owner of a property.
You don’t have to be a credible investor to do so either. Take your time exploring the various investing platforms online before deciding which one is the right option for your investing needs.
3. Rent Out a Portion of Your Home
Before you dive into renting out an entire property, you can get your feet wet by renting out a small portion of your home. This option is ideal for those who have extra space in their current residential homes. For example, you might want to rent out a spare guest bedroom or a finished basement area.
Choosing this route gives you a feel for being a landlord without having to make a large investment. You can also consider purchasing a duplex and living on one side while renting out the other. Don’t hesitate to start small and gradually gain knowledge of the industry before fully diving in.
4. Consider Flipping Houses
Flipping houses are a popular way for real estate investors to make money. Flipping homes is a bit riskier, however. For this reason, this might be a better option for more experienced investors but is something to look into as you gain more knowledge of the industry.
As property values are on the rise, now is a great time to get into house flipping. To find success with this option, you’ll need to find a good bargain. Finding a home that’s only in need of cosmetic repairs is ideal.
When you put in a minimal amount of money to repair cosmetic issues and sell at a competitive price, you can make a profit. However, you should also keep in mind the risks. Some risks include coming across major issues with the property or not making a profit after selling.
Once you start flipping homes, you’ll become more familiar with determining which properties will make you a profit and which won’t.
5. Invest in a REIT
A REIT stands for Real Estate Investment Trusts. A REIT allows you to be involved in the real estate market without having to stay active. Instead, you can invest your money in bonds, stocks, and mortgage instruments related to real estate.
Do keep in mind that there are a few types of REITs to choose from and are as follows:
- mortgage
- equity
- hybrid
A mortgage REIT allows you to invest in mortgages. An equity REIT allows you to invest in properties, and a hybrid REIT lets you do both.
6. Join a Real Estate Investment Group
If you want to own a rental property but would prefer not to have the responsibility of running it, then you should consider joining a real estate investment group. To do so, you’ll need access to financing and a capital cushion. An REIG is comparable to a small mutual fund, but you’ll invest in rental properties.
In most situations, a business or company builds or buys apartment blocks or condos. The investor can then purchase them through the company. This is how you’d join an REIG.
You can own multiple condos or apartments and rent them out, but the company manages the units. Management includes maintenance, advertising the units, and finding/interviewing tenants. Because the company manages these main tasks, they’ll also take a percentage of the monthly rent.
You can see more here about finding townhouses and condos that might be a good investment for you.
These Are Some of the Best Ways to Invest in Real Estate
Getting into the real estate investing business is a great way to earn a second source of income. To start your journey, know the best ways to invest in real estate so you can then decide which option is the right one for you. Be sure to keep this guide handy and use all the helpful tips listed here!
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