Many people are choosing to invest in real estate as a way to grow their income or increase their retirement funds. There are many ways you can get started in real estate investing. To get started, you need to decide which type of investment you want to make, and then determine which loan is right for the investment.
Here are 4 of the best ways to get started in real estate investing:
1. Buy Rental Properties
When you think of real estate investments, being a landlord likely comes to mind. You will have to buy the property, maintain it, and find renters to occupy the land. Ideally, as a landlord, you will need to charge at least enough to cover the mortgage and expenses.
The most common strategy that owners use require them to break even until the mortgage is paid off. Once the loan is satisfied, you will turn a profit.
To get started, you will need to:
- Find the right property- look for available properties on sites such as zillow.com, kwmemorial.com, or trulia.com.
- Calculate expenses- before you decide on which property is right for you, calculate the potential expenses. Take into consideration taxes, insurance, and HOA fees if required.
- Consider property upgrades and repairs- look ahead at potential upgrades to the property you are purchasing. Also, be aware of repairs that may need to take place in the coming months.
After you have chosen the property that is right for your situation, put an offer on it and proceed with the closing.
2. Use a Company The Offers Turnkey Rental Investments
If you want to be a landlord, but aren’t sure how to get started in real estate investing, consider a company that offers turnkey rental properties. These companies:
- Find lucrative properties
- Determine potential upgrades and repairs to the property
- Looks for tenants and vets them
- Takes care of maintenance and management
- Sell you the property with the tenant
These companies manage the entire process for you. They will market the property and find renters. According to Real Estate Bees, agents that have well developed websites and an online presence are most successful. Look for a company that knows how to market themselves well. Then you can be sure they will market your property well.
3. Buy Properties to Fix Up and Sell
If you aren’t interested in being a landlord, there are many options for you. One idea is to buy run-down or foreclosed properties and fix them up. Flipping a house requires you to know exactly how much the repairs and upgrades will cost you.
Another thing to consider with flipping is how to sell the property quickly. The longer you sit on the sale, the more you will lose.
4. Invest in REIT’s
A REIT is a real estate investment trust that lets you invest in larger properties like malls, apartments, and hotels. You will go in on the investment with other people and draw dividends in accordance with the agreement.
This is a great option for people that do not want to take on a great deal of responsibility for rental properties. Often times, these types of investments are managed by a company rather than the investors themselves.
There are three main ways to buy REIT’s:
- Purchase publicly traded REIT- these are listed on major stock exchanges.
- Buy through a broker- you can look for a broker that offers non-traded REIT’s.
- Purchase through a fund- you can find REIT mutual funds or REIT exchange-traded funds to buy through.
Beware that fraud is a problem in this industry. Make sure that anyone who sells you a REIT is registered with the U.S. Securities and Exchange Commission (SEC). This agency protects investors from fraudulent situations.
Types of Real Estate Loans
After you decide which type of investment you want to make, you will need to get a loan that’s right for you. Here is a look at the different types of loans you can get to invest:
If you’re looking to take a risk and hope for lower rates, this type is the way to go. These types usually offer low rates when you initially sign up for them. However, they are called adjustable for a reason. During the loan period, there’s a strong probability that the rates will go up.
This type is the best if you want a steady rate and the security that the rates will not change. If you take your loan out at a fixed rate, you may not get the lowest rate. However, this rate is the most flexible. You also have the freedom to refinance at any time during the course of the loan.
You will always pay interest when you take out a loan. With this option, you can choose to pay only the interest for a specific time period. This is helpful if you need to defer your payments for a while and save up some money. Of course, there is a large chance your rates will increase.
When you know the type of investment you want to make and know which type of loan will work best for you, then you are ready to buy. Investing in real estate can be a great way to secure your future.