Real estate is renowned for being one of the best ways to exponentially grow your wealth. This is especially true if you purchase multiple properties over a long time.
There are ways to invest in real estate other than buying a home, but not everyone is sure how to go about it.
Not sure where to start? Don’t worry, we’ve got you covered.
Let’s take a look at everything you need to know about real estate investing for beginners.
1. Rental Properties
One of the most efficient ways to make money in the real estate industry is to invest in rental properties. As the name suggests, this involves buying a house, building, etc. and intending to rent it out to tenants.
While you’ll have to screen tenants who apply and you’ll be responsible for handling most issues with the property, this endeavor could provide you with a sizable amount of passive income each month (often more than enough to cover the mortgage).
2. Online Platforms
If you wish to be only loosely involved in real estate, using an online investment platform is likely the choice for you.
Online real estate platforms serve to connect investors with borrowers who need money for their real estate purchases. Since you’re technically contributing to the purchase of a property, you’re entitled to a portion of the residual income that the buyer obtains.
This is a particularly noteworthy option for those who have a significant amount of money to put down initially, as a higher contribution will equate to a higher return.
3. Flip Houses
The premise is simple—you purchase a house and then sell it at a later date for a higher amount than you paid for it.
In general, there are two ways to go about this:
- You renovate the home to add to its value
- You wait for the local market to favor sellers so that you can list it at a higher price
This method involves a lot of patience (and extra money for additions/repairs to the home), but it can be one of the most lucrative.
4. Real Estate Investment Trusts
For those who are unfamiliar with real estate investment trusts (REITs), it functions similarly to buying stocks in the stock market.
The money you invest in a REIT is set up to invest in different areas of the real estate industry. These include bonds, stocks, and mortgage instruments.
An equity REIT can also invest in properties, providing greater flexibility in terms of your types of contributions. These require little involvement and typically offer sizable yields over time, making them a great way to invest without having to worry.
Real Estate Investing for Beginners Isn’t as Hard as It Seems
With the above information about real estate investing for beginners in mind, you’ll be well on your way toward making the decision that’s right for you.
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