If you don’t already know how to invest in real estate, breaking into the industry can be intimidating. It can take several years before an investor feels comfortable and confident in real estate. Jamie tells that’s why beginner-friendly investing strategies are a great place to start. While they are suitable for investors with little to no experience, they can still be highly profitable when managed correctly. Jamie shares 5 strategies for beginners to how to invest in real estate.
1. Real Estate Wholesaling
One of the fastest ways to get started in real estate is by wholesaling. This unique strategy involves securing a property under market value and assigning an end buyer to purchase the contract. Wholesalers never own the property and instead make money by adding a fee to the final contract.
Jamie says the key to wholesaling lies in creating a strong buyers list. This is essentially a list of investors who may be looking for their next deal. Wholesalers will often run a lead generation campaign to identify potential buyers. This involves marketing their business, often through emails, social media, or direct mail, and then building a list of interested investors. To create a buyers list, you will need investors’ names, contact information, type of funding, and buying criteria. This will ensure you know what kind of deals they are looking for and how to reach them once you’ve found the right property.
2. Real Estate Prehabbing
Another great option for beginning real estate investing is through “prehabbing.” Unlike a rehab, which involves funds to make significant improvements, a prehab project requires only minimal upgrades. Jamie suggests Investors will typically enhance a property just enough to entice other investors visually. Rather than making dramatic changes, prehabbing consists of improving property through sweat equity. A few prehabbing projects include:
Cleaning: Taking the time to remove trash and debris from a property, including general cleaning, can have a powerful impact on its appeal.
Painting: At minimal costs, painting provides an affordable way for beginners to improve the appearance of a property.
Landscaping: If you can’t get people to like the outside of the property, they most definitely won’t be interested in taking the time to come inside. Believe it or not, curb appeal goes a long way in real estate, at very little cost.
3. REIT Investing
Real estate investment trusts (REITs) are a good jumping-off point for those new to real estate. Equity REITs, which are the most common type, are essentially companies that own income-generating real estate. Jamie Goldstein tells Investors to purchase shares in these companies and generates income through regularly paid dividends. REITs are perfect for beginners who cannot pursue real estate full-time because they can generate steady, passive revenue streams.
While REITs can be thought of similarly to investing in stocks, according to The Motley Fool REITs often pay above-average dividends. To get started, try researching publicly-traded REITs and evaluate their records yourself. Research the company’s anticipated growth and current dividends, as well as the funds from operations (FFO). It can be a good idea to discuss with a financial advisor when selecting a REIT to invest in.
4. Online Real Estate Platforms
Online real estate platforms, also called real estate crowdfunding platforms, help connect borrowers with investors. Developers will post deals and projects that they need financing for, and investors can then finance these projects through debt or equity. This creates a mutually beneficial arrangement; investors can enjoy the benefits of real estate investing without having to deal with ownership or labor. The developers can get the financing they need for projects.
Keep in mind that financing real estate deals can be just as risky and speculative as directly investing in real estate yourself. Always do your homework before you strike a deal. Investors benefit from receiving monthly or quarterly distributions, and they can choose to invest in standalone projects or a portfolio of projects. It’s also a great way to diversify your real estate investments geographically.
5. Purchasing Rental Properties
Jamie says ready to become a landlord? Investing in rental properties can be a great way to secure a fixed monthly income. If you think you can handle the responsibilities of being a landlord, you will definitely enjoy earning income consistently.
If you buy a rental property at the right time and in the right market, you might even be able to cover your mortgage, maintenance, and repair expenses with your rental income.
As a rental property owner, you can decide how active or passive you want this income stream to be. Landlords who prefer not to be “landlords” at all can contract out their duties to a property manager. Some rental property owners choose to outsource just the maintenance and repairs, and others might do everything themselves to cut costs and maximize income.
Joseph Grinkorn is the successful businessman in New York.
He gives you the best tips towards manage your property and invest your cash with affordable plans.