Real estate investment is the oldest trick in the book of financial freedom. It offers diversity to anyone’s investment portfolio, and there are many ways to get into the market. Real estate investment is not always glamorous. After all, we don’t all have the funds for an apartment complex in Manhattan, but it can still be lucrative. Real estate investment is an easy way to add to your net worth and increase your income streams. Investing in real estate can be confusing and difficult for new investors, but these are a few ways you can break into real estate:
Real Estate Investment Trust
Real estate investment trusts are created by companies that own a lot of real estate across multiple sectors. Many real estate investment trusts are traded on major stock exchanges and can be a great way for new investors to break into real estate. It is a great option for people who do not have a lot of capital as the companies that own the trust are in charge of operation and financing for the property. Investing in a real estate investment trust will help add real estate to your portfolio without requiring tens of thousands of dollars. Real estate is difficult because it requires a lot of leg work. Traditional real estate investment requires researching, management and financing. Using a real estate investment trust will allow you to earn a share of the income produced from these investments without lifting a finger yourself.
Rent Out Your Current Space
If you already have a property but have spent the majority of your capital on it, don’t fret! A great way to introduce yourself to real estate investment is renting your current space. If you have an extra room in your home, you can cut down on living costs and begin your real estate investment journey with a renter! Alternatives to this include Airbnb-ing. This could be a great option for people who don’t want to commit to always having a renter in their home. Renting a room is also a much more accessible way of investing than buying a property.
Invest Outside of Your State (For Some People)
Many people find it impossible to invest when they live in expensive regions such as San Jose (average home price is $1.3 million) and Manhattan (average home price is $1.2 million). This is where investing in other states can be a great option. Investing out of state does not mean you have to move. There are property management companies that will do all the gritty work for you. For instance, a California investor can contact property management companies in Phoenix after they buy a home in Phoenix (average home price of $370k). These management companies will do all the heavy lifting for investors, such as finding tenants, screening tenants, and maintenance. Investing in a cheaper state can make anyone a real estate mogul.
Invest in a Multi-Plex
If you are someone who has some or a lot of capital saved up and are unsure of how to start investing in real estate, consider investing in a multiplex. It is a great first step into real estate as it will allow you to rent more than one property, and you can also live in a unit while renting out the others. Buying a house with multiple units will help you better understand the real estate market as there are more opportunities for growth and learning.
Investors can also cut costs by buying a multiplex. A multi-plex is more expensive, but they are also more profitable. If you buy a complex with four units, you can live in one while the other three units help pay for your complex. This will help offset the cost of a mortgage and living costs. In addition, having more than one renter will create a larger profit which you can put into your mortgage or use towards another rental property. Multiplexes are more expensive in the beginning, but they also pay themselves off faster. If you average your cost per unit, it will likely be much cheaper than a single-unit family home. You will also only need one loan for the complex, even though there are multiple units.
You can also use a property management company like the one shown earlier to help alleviate the duties of a landlord. Things such as finding renters and maintenance can all be taken care of by a management company. For a small fee, you can relax and not worry about renters, evictions, or other landlord issues. There will no longer be any reason to stress, and you can be one step closer to financial freedom.