How to invest in real estate: 4 ways to get started
If you are looking to invest a large amount of money into something, you should definitely look into real estate investing. It is a relatively safe and reliable way to invest, as real estate tends to hold its value when inflation is on the rise and offers both tax breaks and competitive risk-adjusted returns.
But how do you get started? It depends on how much time and effort you can put into a real estate investment. You could start house-flipping, rent out a room in the house that you live in, or invest in rental properties. Alternatively, if you are planning on selling your home in the near future, you could invest in it to increase its value.
Do you want to learn more about real estate investing? If so, read on! Here, you will find a list of reliable ways to become a successful real estate investor.
Start house-flipping
One of the most popular real estate investing strategies is house flipping. It involves buying a property, renovating it, and then selling it for a profit, somewhat similar to the BRRRR model. If you have some experience with home improvement projects, house flipping could be an excellent option for you.
To start flipping houses, you will need to have enough money to cover the purchase price of the property and the renovation costs. To make it more affordable, you should start by looking for properties below market value. You can find such properties online, by contacting a real estate agent, or by attending foreclosure auctions. If possible, have an experienced house inspector inspect the property that you take a liking to. That way, you will not end up buying something that is simply too expensive to repair.
Once you have found a property that you want to flip, you will need to either get a loan or buy it with the cash you have already saved. Having purchased the property, you will need to renovate it. To save money, you should try to do as much of the work yourself as possible. However, if you are not experienced in home improvement projects, it might be best to hire a contractor to do the work for you.
After the renovations have been completed, it is time to list the property for sale. You can do it by hiring a real estate agent or listing it on an online platform like Zillow. Then, when you find a buyer, you just have to sign a sales contract and transfer the property’s ownership to the buyer. And that is it! You have now successfully flipped your first house.
Rent out a room
If you are not looking to invest a lot of money in real estate and do not want to deal with the hassle of renovating a property, you could consider renting out a room in your house. It is a great way to bring in some extra income without having to put in too much effort.
For starters, you will first need to figure out which room you want to rent out. It could be a spare bedroom, an office, or even a basement. Next, you should start preparing the room that you have chosen for your future tenant. This might involve painting the walls or buying new furniture.
Once the room is ready, you will need to find a tenant. You can do this by listing the room online, posting about it in local Facebook groups for landlords, or through word-of-mouth. After you have found a tenant, you will need to sign a lease agreement with them. This legally binding document outlines the terms of your tenancy agreement. With a signed lease agreement, all that is left to do is wait for your tenant to move in. After that, you can start collecting rent from them every month.
Invest in rental properties
Now, if you want to invest a larger sum of money into real estate, you could consider buying a rental property. Rental properties can generate a lot of income but also come with a lot of responsibilities. For example, you will be responsible for maintaining the property, finding and screening tenants, and collecting rent from each tenant every month.
To start investing in rental properties, you will need to have enough money to cover the purchase price of the property, the renovation costs, and the down payment. If possible, go for a larger property, such as a duplex or a triplex. That way, you will be able to generate income from multiple tenants at the same time.
The rental market is quite competitive, so you must make sure your rental property stands out. To do so, you should try to offer something that other rental properties in the area do not have. For example, you could offer furnished apartments, pet-friendly rentals, or short-term rentals. Apart from that, your apartments should be comfortable and well-maintained. That way, you will have no trouble finding and keeping tenants.
Invest in your home
You could always start investing in your home. If you plan on selling it in the future, making some improvements to it is guaranteed to increase its value. For instance, you could renovate the kitchen or the bathroom, build a deck or a patio, or finish the basement. Alternatively, you could add an addition, such as a garage or a sunroom.
Other improvements you should consider include purchasing a new garage door, building a swimming pool, and installing green energy solutions, such as solar panels or a wind turbine. You could even add a mother-in-law suite or a rental unit to your property. By doing so, you will be able to generate income from rent while also increasing the value of your home.
In conclusion
There you have it! These are four ways to get started with real estate investing. If you do not have much money to invest, you could start by renting out a room in your house or renovating it. Alternatively, if you have a large sum of money to spare, you could consider buying a rental property or flipping a few houses.
All in all, no matter which option you choose, real estate investing is a great way to generate income and build wealth over time. While it does come with some risks, it is a relatively safe and reliable investment, provided that you know what you are doing. So, what are you waiting for? Start investing in real estate today!
