Do you have an entrepreneurial spirit and a desire to get grow your net worth? For many, an effective way to do this is through real estate investing. The reason for this?
Real estate offers many strategic benefits, including the ability to use leverage (mortgages) and benefit from numerous types of tax deductions. It also offers the ability to capitalize on market inefficiencies—meaning, you can often buy real estate under it’s true value. That’s very difficult to do when it comes to stocks, bonds, and mutual funds, for example.
Also, real estate offers the power of cash flow, paired with debt paydown by tenants and the potential for long-term price appreciation. In aggregate, these benefits of investing in real estate are both rare (not found in other asset classes) and extremely compelling.
You might feel lost if you’re new to the real estate game and have no idea how to get started. Thankfully, it’s easier than you might think. If you’re wondering how to get into real estate, keep reading.
Here are the easiest ways to get into real estate.
1. Invest in Rental Properties
Rental properties can be a phenomenal source of income, as well as long-term debt paydown by tenants, price appreciation over time, and tax advantages.
Meaning, investing in rental properties can be a great way to grow your wealth. However, it is essential to do your homework and to be prepared for the potential challenges that can arise.
You will want to find a property in a thriving neighborhood that people will want to rent. You’ll also need to set aside a reserve fund to cover unexpected repairs and vacancies. If you want to earn the maximum amount from your rental property, then you’ll need to roll up your sleeves, list it for rent, and lease it out yourself.
Or, to make your life easier, you can hire a property manager to rent out your property and manage yoru tenants. For compensation, the property manager will usually charge the first month’s rent, as well as 8-10% of the monthly rent over time.
You could also create a vacation rental welcome book. You can use this book to introduce guests to your rental property and provide them with helpful information about the area.
2. Buy REITs
Real Estate Investment Trusts (REITs) are portfolios of income-producing real estate assets, such as office buildings, retail centers, apartments, and hotels.
For a beginner, they are an easy way to get exposure to the real estate market without directly owning or managing any property.
REITs are traded on major stock exchanges. You can buy and sell it like any other stock, so you just need to know their ticker symbol in order to buys shares. You can use apps like Robinhood, SoFi, Axos, or others to easily buy shares of REITs using your smartphone.
Examples of REITs include LTC Properties, Inc. (LTC), CTO Realty Growth, Inc. (CTO), and others.
The downside of REITs is that you own shares in the REIT instead of shares in the actual assets, so you will lose many of the benefits of direct real estate investing. However, if the real estate market does well, this is a way to capture some of the upside and it is a truly passive investment.
3. Fix-and-Flip Properties
Another way to get into real estate is buy a fixer-upper and flip it for a profit. This is where you buy a property, make improvements, and sell it for a profit. This can be a cheaper way to get started in real estate, because it does not require much capital.
You could also partner with an experienced and successful flipper. By shadowing and assisting with the day-to-day tasks involved in the process, you can learn a great deal about what it takes to be successful in the industry.
This will also let you get a feel for the type of properties that are most likely to turn a profit.
4. Get Into Real Estate through Online Syndications
Of the easiest ways to get into real estate, investing through online platforms might be the easiest.
With this approach, you invest in a real estate crowdfunding platform that allows individuals to pool their money together to invest in properties.
There are also several online platforms like this, with CrowdStreet.com and Fundrise.com being the two best known. Other companies like this include Arrived Homes, LEX Markets, Streetwise, RealtyMogul, and Groundfloor.
The benefit of this approach is that you can often get started in real estate for small amounts of money, often as little as $500 to $1,000.
Turn a Quick Profit in Real Estate
Investing in real estate can be very rewarding, both financially and personally. The best way to get into real estate is to get educated. I’d suggest that you either into taking some classes online, join a local real estate club, or get to know someone who is already investing in real estate who can show you the path.
Once you understand the basics well, start shopping real estate and making offers on properties that fit your criteria. Many opportunities are awaiting you. So explore your options and find the one that best suits your needs and interests.
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