Have you been thinking about your financial goals lately? Researching on the best methods to build personal wealth for the future? When the stock market is performing satisfactorily, not as many people talk about the potential asset of real estate investing. Considering the benefits of this investment category is a must-do for modern consumers. While the risk is on many occasions just as great—and the challenge is oftentimes dicier—the lucrative rewards are second to none.
A myriad of valuable methods exists to take your first investment step into the real estate market. For your consideration, here are a few simple ways to start investing in real estate.
Buy Into REITs: Real Estate Investment Trusts
Investing in real estate doesn’t mean automatically buying physical properties. Instead, there is an alternative, lower-risk option known as a REIT. A real estate investment trust (REIT) lets individuals invest in commercial real estate, similar to mutual funds. You invest in companies that invest in real estate asset classes and get paid dividends like a normal fund. Companies comprising of the selective REIT come in an array of diverse forms. They may own retail spaces, shopping malls, healthcare buildings, or even apartments. If you’re solely looking to dip your toes in or diversify your investment portfolio, REITs are ideal places to begin.
Rental Properties: House Hacking or Investment Projects
House hacking is a notable method on the list of simple ways to start investing in real estate. Why, may you ask? Classic house hacks are creative endeavors for supplemental rental income. Essentially, this strategy is to reside in your investment property and rent out individual rooms or units in a multi-unit building. Obtaining owner-occupant financing is generally less difficult with less money down.
You can choose to live in your investment property or buy and rent out the entire property for individual rental purposes. Either way, you can decide to rent with lease term contracts or tap into a hosting service such as Airbnb to cover mortgage costs—and potentially generate a part-time or full-time income. Keep in mind, if you don’t desire to be a landlord or maintenance person, you’ll need to look into hiring a property manager.
House Flipping 101: As Seen on TV
Investing in fix-and-flip properties has grown exponentially in popularity due to TV shows illuminating the experience. This high-risk method has investors diving deep into the real estate market as a business endeavor. Fortunately, obtaining an investment property loan is relatively simple with the availability of hard money loans from private lenders.
That being said, flipping is a tough business, especially if you lack experience. Consider finding a knowledgeable business partner, such as a contractor, to help estimate expenses and manage the project together. Either route you go, the best real estate investments are the ones that specifically serve you, your current resources, and your long-term goals.