Different Ways to Invest in Real Estate

Are you ready to invest in real estate? Are you wondering if there is more than one way to get in the game?

Believe it or not, you don’t need to jump right into purchasing properties with multiple tenants. There are plenty of ways to try out real estate investing before you decide whether or not it’s right for you.

Here’s what you need to know about different ways to invest in real estate.

1. Passive Investing

First-time investors often invest “passively” on their first deal. They invest alongside a “lead” investor who helps make the decision and reports to shareholders. This can help them to understand what makes properties perform well.

Working with a lead investor can also help mitigate the financial risk you’re taking. Once you get more experienced, you’ll be ready to make a bigger investment.

Working with an experienced investor can also provide you with valuable connections. You’ll find out about the realistic implications of different decisions.

Real estate attorneys can also help you to evaluate projects and funding before you become the lead investor. These experiences will prove invaluable in the future as long as you learn from them.

2. Begin With a Multifamily Unit

Folks may begin their lives as investors by purchasing a house they themselves will live in for a while. If it’s a duplex or has a small apartment, you can get a feel for responsibilities such as building codes, repair costs, and rent factors.

As you become more experienced, you may be comfortable renting out the entire property or investing in larger properties elsewhere.

3. Research Up-and-Coming Markets

There are lots of up-and-coming markets now that more folks are able to work remotely. Areas that used to be un-commutable are now easier to live in when professionals can work from home or only go to the office twice a week.

These areas offer lower rent to tenants for the time being, and the value will increase over time. Work with a more experienced investor to find some areas you might be interested in. Make sure you’ve got data to back up your decision.

Areas with high job growth are of course important. You’ll also want to check out the trends in recent population growth. This includes the average age of those moving to the area.

In addition, you’ll want to take a look at school districts and easy access to transportation. Safety, walkability, and access to things such as restaurants and shopping are also important. You’ll also need to check out the zoning laws and make sure you’re choosing an area that’s renter-friendly.

You’ll need to consider your expected income from rent as it relates to your monthly expenses. If you’ve got a mortgage, you’ll need to take this into account, as well as things like taxes, utility payments, and repairs. Will the typical rent in that area cover these kinds of bills?

Lots of data can help reassure you that you’re making a smart move. But you’ll want to think about your decision all the way through before putting your money behind it.

You can start with a tenant or two, and make sure to get advice from more experienced landlords about checking out their backgrounds. As you develop your experience, you’ll be able to spot solid investment properties in similar neighborhoods.

4. Specialize

Once you’ve chosen a target area, you can begin specializing to set your investments apart and make them more appealing to renters.

For example, you may choose to specialize in condos, mobile homes, or buildings with tax liens. Or you may want to purchase single-family homes with three bedrooms or more. This might be an area to specialize in when the school district is solid based on your analysis.

5. Secure Funding

The goal of most real estate investors is to become financially independent or even wealthy. However, when you’re just breaking into the game, you may need a little help.

If you’re going to be purchasing a home for use as an investment property, you’ll need to look for a private lender who specializes in loans for rental properties.

Getting a rental loan means you’ll need to supply information about your personal finances as well as the property in question. However, there are many investor-friendly lenders out there who can give you the cash you need to start making money now.

6. Secure Your Team

Once you’ve decided on a property, you’ll need a team of qualified professionals to help you manage, insure, and market your property. These could include a real estate attorney, insurance agency, and realty agent.

Make sure these individuals come with experience and high recommendations. You’ve got a lot to lose at the beginning, and you’ll want to make sure you’ve got the best individuals helping you sell.

7. Consider a Real Estate Trust

Another way folks start out down the investing path is to invest in a real estate trust. In doing this you’ll be buying shares in ownership of real estate properties with a REIT.

Like investing with someone more experienced, this is a great way to begin exploring the way real estate investments work without throwing large sums of money behind them.

Invest in Real Estate

If you’re ready to invest in real estate, there’s nothing wrong with starting off small. As you become more successful, however, you can begin using your expertise to grow your business and your profits.

Don’t stop getting smart about investing in real estate now. For investor-friendly loans to help you on your way, contact us today.