While being flashy, owning a real estate property has some of its scares for investors new to this market.
Guess what? It’s understandable as most individuals who have had landlords at one point or the other aren’t ready to deal with maintenance issues that are sure to crop up now and then.
While this might be a valid reason not to delve into real estate in its entirety, diversifying your investment portfolio can never be overemphasized enough.
Most people who tow the lines of the above stereotype should understand that this sector accords them flexibility. So any time your tenant calls you to get a problem fixed, there’s no need to rush down immediately.
This article aims at giving you a few pointers on how you can thrive in the real estate market despite being a newbie and provides an in-depth guide on real estate investment strategies. Armed with these tips, beginning real estate investing has never been a more exciting prospect.
Real Estate Investment: What Does It Entail?
Before we get into the nitty-gritty of real estate investment strategies for beginners, we must have a foundation on what this investment variation means to you – the intending investor.
To get solid ground on this concept, let’s start with the question, “What is real estate?” Although there are varying definitions, real estate refers to any piece of land or property featured on that land.
These lands might possess natural and artificial attributes, including fences, houses, and trees.
With this conceptualization, we can now give meaning to “Real Estate Investing.” In succinct terms, real estate investing involves purchasing land, whether it features natural or human-made properties.
The most typical of real estate forms are;
So, have you been reading some real estate investment strategy PDFs without success? Let’s take a look at some strategies sure to come in handy.
Real Estate Investment Strategies for Beginners: 4 Proven Tips
Have you decided to take that bold step? Well, to ensure that your real estate investment journey remains smooth sailing for the most part, simply engage the following strategies. They include:
1. Purchase REITs
REITs (Real Estate Investment Trusts) accords you the luxury of making real estate investments without actually purchasing physical real estate. While this prospect might seem alien to intending investors, consider it as investing in mutual funds.
These REITs are companies that have commercial real estate properties for the most part, such as apartments, hostels, offices, and retail spaces.
Due to the high dividends existent in REITs, it’s fast becoming a “go-to” option for most individuals planning retirement. As an investor, reinvesting with these proceeds can boost your investments to greater heights.
That said, it’s worth noting that although REITs might sound like great investments, they can be complex sometimes. Why? They vary. With publicly traded and stock exchange-like REITs, investors should always go with the former to put losses at the barest minimum.
To acquire this REIT variation, you can head to brokerage firms around you. For scenarios where you don’t have an existing account, you can get one created in less than 15 minutes.
Most brokerage companies do not include “initial investment” caveats.
2. Tow the Path of Online Real Estate Investment Platforms
Just think of these platforms as “crowdfunding” sites. These platforms bring borrowers and investors to a common ground.
Here, the borrower pitches to the investor, and it’s up to the latter to lend them some funds to cater to their personal needs.
As usual, there’s a catch attached to all these activities. These investors who have made a risk in financing projects through equity or debt expect some kickback every month or quarter.
However, just like other real estate investment forms, there’s nothing definitive here – as they’re more liquid than the usual stock trades we know.
That said, to make use of these platforms as an investor, you have to attain a certain cash bracket.
To rank as an accredited investor, you’ll need to, as specified by the Securities and Exchange Commission, have an income of up to $200,000 in the last 24 months or a net worth summing up to $1 million or higher.
3. Think About Making Residential Real Estate Investments
Investing in residential real estate is one of the surest ways to make money in this ever-growing industry. Here, all you need to do is find an apartment that features a combined expense lower than your proposed rent.
Even though you wouldn’t want to become a landlord responsible for fixing that broken door or toilet, you can effectively nullify this worry by hiring the services of a property manager to keep everything in order.
On the other hand, managing these buildings or apartments is beneficial in the long run as they’ll help give you some intricate knowledge inherent in this industry.
Armed with the basics, you can now head into the market next time, buzzing with experience.
4. Rent Out a Room
Well, we’d like to think of this step as the summation of real estate investment strategies for beginners. You don’t have to obtain a long-term tenant as potential short-term renters abound when you use an Airbnb site.
The screening process on show here insures your rented space against damages of any kind.
So, if you have a spare room, rent it out and eke out passive income today.
Even for intending investors, investing in real estate shouldn’t be herculean. Before you make that bold step, choose an investment form that tallies with all your needs.
Put into consideration how much of an investment you’re willing to make, a timeframe in which you’re looking to earn dividends, and whether or not you’d love to be that landlord who’s responsible for maintenance.
However, if you lack basic DIY (Do It Yourself) skills, towing the path of REITs or a crowdfund is advisable.