You’ve probably heard of people talking about investing in real estate at one point or another, and based on the things they’re saying, it sounds like a pretty promising gig. It almost sounds so promising that you even thought about giving it a fair shot. But then you get to thinking about the ins and outs, ups and downs, and financial strain that you’d have to endure, and immediately talk yourself out of it.
Well, it’s perfectly understandable to be wary and cautious about how you spend your money, especially if you’re going to invest it in a venture that you’re not too familiar with. If anything, you want to become more well-versed in real estate investing before doing anything. And that’s what we’re here for… to help you become more well-versed in real estate investing and to tell you easy ways to get started.
One of the biggest reasons why people feel so intimidated about investing, in general, is because they think they need to have a lot of money to do so. This particular way of thinking is directed solely at investing in stocks and bonds. Unlike stocks and bonds, buying and owning real estate doesn’t require that because you can use leverage to buy your property. You’ll use your borrowed money to make a down payment on a portion of the total cost, and then pay off the remaining balance, plus interest, over the course of the remainder of your term.
But it’s important you know that there are different ways to invest in real estate that’s not painful nor is it too taxing on your wallet. If you’re still considering giving real estate investing “the old college try,” consider the following ways to get started.
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Different Ways to Invest in Real Estate
If you watch HGTV, you’ve seen a dozen house flipping shows, but out of all the shows centered around flipping homes, Chip and Joanna Gaines’ show Fixer Upper is probably the most popular. They take you through some of the processes of what it’s “like” to flip homes and profit from it.
But understand that what you see on TV is only a fraction of what it’s really like to get into house flipping. Yes, you can use leverage to buy your fixer-upper property but you’ll also be investing in sweat equity as well. On top of that, you’ll need a trusted group of contractors and a hope and a prayer that the repairs and renovations needed to make the home nice and shiny again won’t destroy your budget.
But this is a very lucrative way to invest in real estate. You just need to choose your property wisely and be able to distinguish a good investment from a money pit.
Buy Raw Land
Buying raw land is the purchase of a plot of vacant or empty land that doesn’t have any buildings or equipment on it which can be used for residential or commercial developments as well as for farms or natural resources.
The idea is to buy up land in an area that you can foresee being developed later and wait for developers to contact you about buying it. For the right price, you can sell it and have a nice profit from it.
This is probably the most common way to invest in real estate that investors consider first, and it’s the easiest to understand. Basically, you buy a property and rent it out to tenants. You have the option of renting to a family of any size, you just have to make sure to conduct a thorough background, credit, and reference check on every prospective tenant.
You can rent out your entire property or rent out a room in your home, almost like a hotel. There are lots of people who are getting into this realm of real estate and are generating quite a bit of income from it.
You can rent it out to long-term tenants but if you rent it out per night, you can potentially make more money. Platforms like Airbnb and HomeAway have popularized short-term renting and generating additional income.