Investing in real estate can be a really exciting and satisfying experience if you know what you are doing and the proper steps to take. Unlike investing in stocks and bonds, real estate investors can buy a property using leverage, paying a portion of the total cost upfront and then paying off the property over time. The main way that real estate investors make money is by becoming the landlord or a house flipper. Investing in real estate can be a great source of income if done properly. Here are some simple ways to invest in real estate and how to make money from these options.
Owning rental properties is great for people with a DIY mindset and those who do not mind managing tenants. This option does require a substantial amount of capital to finance initial renovation and maintenance costs, as well as money to cover vacant months.
Any kind of investing comes with its downfalls and risks. There are many advantages to SFR investing, but there are also some disadvantages.
Owning a rental property is not for everyone, but if you believe you can handle managing tenants and being proactive about maintaining your property, this can be a great way to make money.
If you have experience in real estate, marketing and renovation, house flipping may be a great option for you. House flipping requires capital and the ability to oversee and achieve repairs. This can be considered the "wild card" of investing because it is never guaranteed to make as much money as you may hope to on a property.
House flipping can cause a lot of stress from finding the right property, anticipating costs involved, dealing with contractors, realtors and local ordinances, meeting deadlines, and finding a potential buyer.
This option is ideal for people who want to own rental real estate without the hassle of actually running the property. Investing in REIGs requires capital and access to financing. They are essentially like purchasing small mutual funds that invest in rental properties where an investment group or company buys or builds a set of apartment blocks or condos, then allows investors to purchase them through the company. A single investor can own one or multiple units of self-contained living space, but the company who operates the investment group collectively manages all of the units, including handling maintenance and taking a portion of the monthly rent.
Real estate investing platforms are for investors who want to join others in investing in a bigger commercial or residential deal. These kinds of investments are made online through real estate platforms, also known as crowdfunding. This option still requires capital but not as much as what is required to purchase a property outright. These online platforms connect investors who want to help finance projects with real estate developers.
Investing in real estate can be a fantastic way to make money and add to your real estate portfolio. With everything else in real estate, investing can have its risks and can have both a profit potential and a loss potential.
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AnnieMac Home Mortgage is not a financial advisor. The ideas outlined above are for informational purposes only, are not intended as investment or financial advice, and should not be construed as such. Consult a financial advisor before making important personal financial decisions