Beginner’s Guide to Real Estate Investing

It’s no secret that the real estate market has taken off in unprecedented ways in 2021. People are moving from major cities to smaller towns and suburbs, or they’re moving to entirely different states altogether. With all of the opportunities to cash in on these trends, savvy investors are looking for ways to get involved.

Surprisingly, there are a ton of different ways to dip your feet in the real estate investing pond. If you’re new to real estate, then you’re probably wondering how you can get involved. Read on for the ultimate guide to investing in real estate to help you get started!

Which Way Do You Want to Go?

When you make the decision that you want to dive into the world of real estate investing, the first thing you need to know is that there are a number of different ways to get started. Some of them require your active involvement, while others are completely passive. The following options are just a few ways you can get involved in what the real estate market has to offer. Here you can check the best online real estate training programs by Greg Luther Coach​​​​​​​.

Flipping Houses

The first and most active way to get involved in the real estate investment game is to start flipping houses. If you aren’t familiar with this trend, flipping houses involves purchasing fixer-upper properties for a low cost, doing a total renovation, and then selling the home for a profit.

Another form of house flipping works similarly to day trading. Here, the investor purchases a home in a buyer’s market and holds onto it until the market transitions to a seller’s market. Assuming things go to plan, this nets them a hefty profit.

Rental Housing

Think you’re cut out to be a landlord? Then investing in rental property might be the route for you. This form of investment involves you purchasing one or more properties to use for rental purposes.

The great thing about investing in rentals is that, if you have the cash up front, you can purchase a property outright and then bring in profits each month that it’s rented out. If you’re extra savvy, you can even purchase foreclosed apartment buildings at auction for a significant discount and make an even bigger profit.

There are a few things to remember when it comes to rental properties, however. First, you need to abide by fair housing laws, and you need to keep some cash on hand to handle any maintenance issues that come up while you have a tenant.

Real Estate Investment Trusts

Real estate investment trusts (REITs) are trusts formed for the purpose of using investment money to purchase income-producing real estate. You can buy into a REIT on most major exchanges, just like you would do if you were purchasing stocks.

REITs must pay 90% of their taxable profits to shareholders in dividends. The saves the REIT from being subject to corporate income taxes, and therefore sends more profits to the shareholders. They function much like any stock that pays dividends.

Buying into a REIT gives you the opportunity to have a stake in bigger real estate investments like large retail properties, hospitals, and office buildings.

Real Estate Investment Groups

If you like the idea of operating rental property, but you’re not prepared to deal with all the responsibilities that come along with being a landlord, then you should consider investing in a real estate investment group (REIG).

Here, a REIG purchases or builds apartment buildings, then other investors purchase the buildings through the company. An investor can own as many units within the building as they would like to invest in, however, it is the actual investment group that is in charge of managing the space.

As a result, you have the opportunity to make money from rental income without the hassle of actually having to deal with tenants.

Diversify Your Investments

Would you put all of your hard-earned money into a single company’s stock? Probably not. The same rule of thumb applies in the real estate investment world.

Try your hand at a number of different real estate investments. For example, invest some of your cash in mutual funds or REITs, and then consider purchasing a piece of property to use for rental income. Diversifying your investments increases your chances of success, and it reduces your overall risk.

Weigh Your Risks and Rewards

Investing in real estate is great, but, as with all forms of investment, it also involves a handful of risks.

For example, when you purchase a home with the intent to flip it, you could encounter any number of issues. The house might have unforeseeable issues like a slab leak that’ll drain your renovation budget. It may also take a long time to sell, or it won’t sell for as much as you would have liked.

Rental housing has its own risks. Your tenants might not take care of your property, or they might not pay their rent, and you’ll have to file for eviction.

It’s important for you to do a deep dive into the ins and outs of the form of real estate investment you’d like to get involved with. This will help you make a truly informed decision about what you’re doing with your money, and it’ll prepare you to handle any unexpected events.

Are You Ready to Get Into the Real Estate Investing Game?

Getting involved in real estate investing is a great way to plan for your future. The great thing about it is that you can be as active or passive as you want to be in your investment by changing up the way that you choose to invest in the real estate market. It’s truly a fascinating and fun way to make money!

Planning for your future involves making a number of good investment choices. If you’ve never tried your hand at investment, then you’re probably wondering how you can be successful. Check out the rest of our blog for tons of information that’ll help you do that and much, much more!