If you’ve ever rented an apartment, you probably don’t aspire to be a landlord. Being at a tenant’s every beck and call can be quite frustrating, but if you do it right, owning real estate can be quite rewarding. The problem is many aspiring real estate investors have no idea where to start or what type of investment is right for them.
Real estate investing can be very lucrative, but depending on the niche you get into, it can also be a lot of work. If you’ve been considering getting into real estate investing and you need a little guidance, keep reading below for several ways to get started.
1. Purchase REITs
REITs, or real estate investment trusts, are companies that own properties that produce income. These companies then distribute a percentage of the profits to the shareholders as dividends. As an investor in REITs, you can invest your money in a property without the physical property.
REITs produce a steady stream of income for investors, and if you don’t need the dividends you receive, you can reinvest them to see your investment grow.
2. Look into Online Real Estate Investing Platforms
Online real estate investing platforms connect real estate developers with investors who wish to finance their projects. These investors take on significant risk and pay a fee in exchange for monthly or quarterly payouts. The thing about using online investing platforms is that these investments are not easy to get out of. You can’t trade them off as you can stock.
3. Become a House Hacker
House hacking refers to buying a multi-unit property, living in one unit, and renting out the rest. While this strategy requires you to be a landlord, it’s often the easiest way to get started in real estate investing because it gives you a place to live nearly or completely free. After all, the rent you collect from your tenants often exceeds the cost of owning the property.
You can get started in this niche by renting out rooms in your home or by purchasing a property with multiple units. Just be sure the property you purchase has expenses that total less than the rent you collect each month. Also, if you aren’t the landlord type, you’ll need to hire a property management service, too.
4. Become a House Flipper
If you’ve ever watched HGTV, you’ve likely seen shows based on the real estate investing strategy called “house flipping.” TV makes it look a lot easier than it really is, but if you’re the DIY type, and you have time and/or money on your hands, this is a great way to get into real estate investing.
The trick to flipping houses is to find an underpriced property that doesn’t need a ton of work. You buy it for cheap, fix it up, and then resell it for more than you paid for it. The caveat here is the longer you hold the property, the more it costs you since you’re paying a mortgage, taxes, insurance, and other monthly expenses out of pocket. You can lower the cost of owning the property if you live in it while you’re making the necessary repairs.
There are a lot of ways to make money in real estate investing. The suggestions above are some of the most common types of investing that are easy to get started in.