Do you want more money in your pocket? Who doesn’t!
Research continues to show that investing in real estate enhances wealth more consistently and dynamically than other asset classes. However, you don’t need to have tons of capital to get started. You just need some solid strategizing and investment planning.
Let’s learn how to get into real estate and supercharge your net worth!
Why You Should Get Started with Real Estate
Real estate has tremendous potential for earning extraordinary income. Unlike traditional investing, real estate provides you with tangible assets. This tangibility offers a sense of control and ownership over your property.
Best of all? You can start at any age, and you can start with just a few thousand dollars.
Cash flow is one of the best advantages associated with real estate. Your cash flow refers to the additional income you accrue each month or year of owning the property. If you rent your property out, you can earn a livable income just on your real estate alone!
However, cash flow only represents one piece of the puzzle. As property increases in value, you also enjoy the benefits of appreciation. Historically, even though the years have ebbed and flowed, real estate has always gone up.
Finally, there are numerous tax benefits associated with real estate. Uncle Sam allows for many different write-offs that can decrease your owed taxable income and increase your net worth.
How To Get Into Real Estate (With Little to No Money)
Contrary to popular belief, you don’t need heaps of money to start your real estate ventures. You just need a plan of attack. Let’s review a few smart examples.
Live Out of a Duplex
Did you know that you can move into a duplex with just 3.5% interest down? On a $250,000 duplex, that’s just an $8750 down payment.
With this strategy, you live in one unit, and you rent out the other one. Usually, the rent can cover the cost of your mortgage.
This strategy serves two, beautiful purposes. First, you have your mortgage payment essentially covered. Second, you build double the equity in the same amount of time.
Consider a Home Equity Line of Credit
A Home Equity Line of Credit (HELOC) provides a cash line for around 75-85% of your property’s worth.
If you want to flip homes (which can be a great real estate move), the HELOC provides a fantastic alternative to traditional money loans. That’s because the HELOC interest rate hovers around 5%, but it has no closing costs.
Check Out Rent to Own Homes
In rent-to-own agreements, you opt to rent a home for a predetermined amount of time. Then, you have the choice to purchase the house before the lease expires.
In other words, you can choose to invest in real estate slowly by making regular payments until you have enough money to purchase.
Buyers need to pay one-time upfront fees (known as option fees) that can cost anywhere from 2-7% of the total purchase price. You’ll still pay rent through the lease term. In some contracts, the rent will go towards the eventual purchase price.
Consider a Vacation Rental
If you find a good property in a great area, you can make serious cash flow from just a few, seasonal tenants. That’s because vacation rentals can go for several thousands of dollars each week.
Lodging apps AirBnB or HomeAway provide easy-to-use platforms for owners to list their properties without the legwork associated with marketing. If you live in a desirable tourist area or business travel destination, you’ll have your work cut out for you.
Buy a Fixer-Upper
We’ve all heard of the infamous buzzwords, flipping houses. In reality, buying, fixing, and reselling a home can be incredibly profitable. However, anyone who tries to convince you that it’s an easy tactic is likely trying to scam you for money.
Like any industry skill, flipping takes time, knowledge, and resources. This applies whether you choose to invest in Los Angeles or Indianapolis (visit this site for more).
It’s critical that you understand your market. After all, you need an active interest in the local region and industry knowledge about home improvement.
Invest in Virtual Real Estate
Did you know that you can buy real estate without the hassles of dealing with a physical property? It’s true! Numerous companies allow investors to enjoy the perks of real estate — without, well, dealing with tenants and hefty contracts.
For example, sites like RealtyShares and Fundrise, allow ordinary investors to enjoy a slice of real estate pie.
You can choose from several investments with varying risks and return potential. You can typically start with as little as a few thousand dollars, and you may choose from commercial, apartment, and residential properties.
Hire a Property Manager
Did you inherit property? Do you have a property that you purchased- but you don’t know what to do with it?
There’s no doubt that being a landlord is stressful. From vetting new tenants to dealing with emergency calls at three in the morning, the emotional costs of real estate can outweigh the financial benefits.
Savvy small business owners understand the value of their time. In fact, many of them consider their time more precious than money.
This is the logic behind hiring property managers. Even though you pay a percentage of your rent towards the management company, they can take care of all the basics including:
- maintenance and repairs
- vetting and selecting tenants
- collecting rent payments
- managing tenant issues
They essentially act as a buffer between you and the tenant. You can deal with your full-time job or personal obligations, and they can handle all the busy work.
With seller-financing, you secure the loan from the person selling the house. As the buyer, you provide your monthly mortgage to the seller. The seller then accrues interests on the loan.
These are often short-term arrangements, with the intention that buyers refinance before the end payments.
As a seller, this can be an advantageous option to make more money. First, you can reduce your carrying costs and get your property sold faster. Furthermore, you can offset the monthly mortgage cost associated with owning a home.
Buy a Vacant Lot
Owning land was part of the original American Dream. Today, it can be part of a diversified investment portfolio.
Most people think that land is expensive: a privilege reserved only for the rich and wealthy. However, it doesn’t have to be that way.
In fact, a simple eBay search reveals hundreds of opportunities to buy lands. Yes, this can be risky. After all, you have no idea how much it can be worth someday.
However, if you’re only forking over a few hundred, you might be surprised at what you can earn in the long-term.
Consider Other Real Estate Investments
As it turns out, you can enjoy the generous real estate market returns through one of the most conventional investing platforms in the world: the stock market.
If you want to try your hand in the market, you can start by looking at the individual, major home building companies. Common examples include:
- KB Home
- D.R Horton
- Ryland Homes
You can also look at home renovation companies like Home Depot or Lowes. Their success rates often correlate with real estate trends.
Even in years when people aren’t selling their homes, they still tend to focus on renovation and remodeling. New swimming pool, anyone?
Each of these companies has publicly traded stock options. By investing in them, you can enjoy dividends and long-term growth.
Real Estate Exchange Traded Funds (ETF)
ETFs refer to an assortment of stocks consisting of numerous, similar companies in a designated asset class.
If you don’t want to buy just one homebuilder stock, you can use the ETF option to diversify your options. It may not increase as dramatically as a single stock, but it also (likely) won’t decline as dramatically either.
Real Estate Investment Trusts (REIT)
Real Estate Investment Trusts refer to stocks that operate real estate income on a monthly basis. Most of these companies invest in commercial real estate.
By law, they are mandated to return 90% of profits to shareholders. Thus, most REITs can pay upward from 5-10% to their investors.
The process of learning how to get into real estate is not as complicated as it sounds! In fact, with the right research and organization, you can get started today!
Are you interested in learning more about securing your financial success? We’ve got you covered. Check out this helpful guide today.