When most people hear or see the word “investing,” they automatically think of the stock market or stocks and bonds. But there are in fact multiple other ways to start investing. One of those ways is in real estate.
Investing in real estate can actually be quite the lucrative investment, if you do it right; doing it wrong can leave you looking for a home of your own. That reason alone is why it’s important to know your options when it comes to real estate investing. There’s not just one way to do it and by becoming informed about all the options available to you, you’ll be able to better determine which option or options are best for your financial standing.
Here are the top 4 ways to invest in real estate.
Top 4 Ways to Get Your Start in Real Estate Investing
1. Rental Properties
You’ve probably ran rental properties through your head multiple times but never made a move to act on it. Well, that’s perfectly understandable. There are many risks involved with buying a house and renting it out.
You have to be careful in opting for the right rental loan program that is affordable and preferably with a streamlined qualification process… because there are loans out there with high interest rates that will eat through your mortgage payments.
On top of that, in taking on the role of landlord, you have to make sure you find the right tenant and remember that you’ll also be responsible for the maintenance and repairs of your property.
To profit from your rental property, make sure you set a rent price that the market supports yet covers your mortgage payments, plus some.
2. Flipping Houses
If you’ve ever watched HGTV, then you’ve probably been bit by the “flipping bug” at one point or another. Flipping houses is pretty simple in theory, right? You buy a house, renovate it, and sell it for more than what you bought it for (including the renovation prices), leaving you with a nice hunk of cash to sit on or reinvest in another house flipping project.
However, it’s also important that you know that flipping houses is a real estate investment that can consume your time, money, and energy in its entirety. Think of it like this… You’re putting down money to buy the house but you’re also putting down “sweat equity” as well to bring a home back to life.
Understand that flipping houses isn’t something that you can do on your own, unless you just know how to do everything. But even the best flippers in the game, Chip and Joanna Gaines have a team of contractors that they did business with for every project they took on, and you should do the same.
If you don’t have a network of trusted contractors, then flipping may not be the best investment for you.
3. House Hacking
House hacking probably sounds worse than what it actually is. House hacking is buying a multi-flat building and renting out the units while you live in one of them. Now, if you’re not handy, you may want to hire a maintenance or repair company because you will be in charge of maintenance and repairs for all units in your building. This can be very lucrative but you have to make sure you’re ready to take on such a responsibility.
4. Short-Term Room Rentals
Short-term room rentals is probably the easiest way to invest in the real estate industry because you’re simply renting out a room in your home and sharing the common areas. The best part is that you don’t have to own your property. People will invest in short-term room rentals while living in their apartment complex.
Everything from Craigslist to Airbnb, you can list your room on multiple plpatforms, you just want to make sure you thoroughly check out your potential roommate or roommates. The co-living living trend is actually pretty popular among millennials, and fool.com states that co-living is one of the real estate investing trends to look out for.
There are quite a few more ways to invest in real estate but these four are some of the easier and more popular ways to do so. Some require a sizable amount of front-end funds while others require a sizable amount of sweat equity, but regardless of which option you choose, you can rest assured in knowing that the reward will be great. Carefully look at your real estate investment options to see which one is a better fit for your financial standing.
