There is no shortage of pithy advice extolling the power of investing in real estate. And for good reason. Despite occasional market corrections, the price of real estate has overwhelmingly trended positive over the years.
However, getting started as a real estate investor can seem a bit daunting for those without experience. How do you even invest in real estate? To help you get started on your journey, keep reading for 6 simple ways to invest in real estate!
The easiest way to get started investing in real estate is by purchasing shares of a REIT. In fact, with modern micro-investing platforms, you can even buy fractional shares of your favorite REITs, meaning that you can start your real estate investment journey with as little as $1!
A REIT is a company that buys large quantities of income-producing properties. It uses the REIT to raise stock-like equity to help fund operations and acquire more properties.
By law, REITs are required to distribute at least 90% of their profits to shareholders via dividends. This results in a regular cash stream for investors.
There are literally thousands of REITs on the market, from environmentally conscious to cannabis growing and everything in between. Just find the niche you believe in and want to support and start investing today.
Online real estates platforms such as Fundrise and Crowdstreet allow you to invest in large commercial real estate acquisitions when you don’t have the cash or credit to do so on your own.
The advantage this has over purchasing shares of a REIT comes down to control. When you become one of the principal owners of a major property, you get more of a say in operations and development and don’t have to simply wait around for dividend disbursement.
The downside is that you typically have to have a significant chunk of cash to be accepted as one of the investors in a crowdfunded acquisition, usually at least six figures.
Purchasing a rental property is arguably the most straightforward and intuitive way to get into the real estate game. Buy a property and rent it out for more than the monthly mortgage payment. Keep the profit.
This method of becoming a landlord is how millions of Americans have developed their wealth over the years. It is a prime example of using debt to build wealth. As long as you qualify for a loan and can keep up with the payments, you can produce a revenue stream. Savvy investors then use this revenue stream to qualify for bigger and bigger loans to rent out more/larger properties.
The downside to this method is the amount of work being a landlord requires. While collecting rent is often referred to as “passive” income, property management is a full-time job-and then some. Repairs, complaints, and keeping the building occupied are just a few of the considerations required of a landlord.
If you don’t know what property flipping is, you obviously have never watched HGTV. The network is a constant reel of renovation personalities buying rundown buildings at a cheap price, spending weeks/months modernizing them, and then watching the price tag skyrocket.
Although this is arguably the most exciting form of real estate investment for those who like to get their hands dirty, there is no denying property flipping gets more difficult with each passing year. Investors across the country have stormed rundown areas of cities throughout the country and turned them into chic neighborhoods. And the cost of building materials is through the roof.
However, if you have foresight that a rundown area is trending toward revitalization and are good at project management, flipping properties can be a rewarding and profitable enterprise.
If you have a little patience, buying land can be an extremely lucrative real estate investment. Usually much cheaper than purchasing developed property, land investment is great for those with a buy and hold approach.
Buying land is all about having vision. While people may not be clamoring for your barren field today, what will the area look like in 10 years? In many cases, you will have developers coming at you with a blank check for the chance to start digging on your property.
Many people have gotten their start as real estate investors using the live in and rent approach. Whether it is renting out a spare room in your home or listing your property as a vacation rental while you are away, there are numerous ways to use this concept in 2023.
While you sacrifice a little privacy and mix business with your personal life, it is a great way to kill two birds with one stone and accumulate capital for a more traditional real estate investment in the future.
Even though most people know that investing in real estate is great advice, few have any idea of how to get started on their journey. By choosing from any of the 6 ideas listed above, you can get the ball rolling and let property make money for you!