How to Get Involved in Real Estate Investing

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How to Get Involved in Real Estate Investing

If you think that real estate investing is the perfect antidote to the monotony of a traditional 9 to 5 job, you are right because this area of business is everything but dull. There are many directions for you to explore and the best thing is that you don’t need a small fortune to get started, contrary to popular belief. So, if you are ready for a change of career and willing to learn about the intricacies of the real estate world, here are a few suggestions on how you can get involved with investing.  

Reap the benefits of a REIT

If you are attracted by the idea of investing in real estate without actually owning physical property, then Real Estate Investment Trusts (REITs) might be the optimal option for you. So, how it works is that you purchase individual shares of a REIT holding. Moving on, that REIT will purchase different properties, such as office and apartment buildings and rent the individual units in return for monthly payments. 

The positive sides to investing in REITs are that the process is simple and aside from making the initial investment, there is not much for you to do. In addition to that, a REIT needs to pay out 90% of its taxable profits in the form of dividends to its investors. This can be both positive and negative because that also means that there isn’t a lot left to acquire new properties. To sum up, REITs are best suited for those who wish to invest in real estate without having to own or maintain a physical property.

How to Get Involved in Real Estate Investing

Consider investing in rental properties

Investing in rentals is perfect for individuals who are gregarious and who enjoy keeping the properties in good shape. If you are successful at it, these properties will provide you with a fixed monthly income while in return you would have to do what you enjoy: stay in touch with your tenants, help them get things fixed when the need arises, and take care of the property when it is vacant.

The tricky thing, if you are inexperienced, is to find a financially rewarding property and that often depends on the neighborhood and proximity of schools, hospitals, shopping malls, etc. This means that, if you make a wrong decision, you may be stuck with a vacant rental which is a financial nightmare. To avoid this, it is best to consult a top real estate investment firm on the question of finding a suitable property. What’s more, its experts can also provide legal consultation and advice on handling taxes. So, if you prefer a steady income and you don’t mind being available for tenants, you should invest in rentals.

Deliberate over investment clubs

People have been creating clubs to gather like-minded people for a long time so it is no wonder there are also clubs for people who are interested in investing in real estate. The basic notion behind these clubs is that the members pool in money and together make decisions on which properties to acquire. Most clubs are structurally organized with written operating rules and they distribute tasks between the members.

However, you need to look into membership fees to avoid unpleasant surprises since some can be quite hefty. Also, having in mind that these are, first and foremost, clubs and not large corporations, feelings can sometimes get the best of members in which case they might pass a good investment opportunity to avoid offending a member. So, a similar level of risk tolerance is a prerequisite for a functional investment club. 

How to Get Involved in Real Estate Investing

Try your luck with house flipping

House flipping can be an exciting manner of entering the world of real estate investing for those who are great at networking, who are patient and a have high tolerance for risk. So, how it works is that you purchase a house at a smaller price and sell it at a higher one as soon as possible. Your main target would be fixer-uppers that might demand some renovation before you can sell them or they can be house in good shape, such as foreclosures.

The bad side is that you may learn that the property needs more investments in terms of renovation which immediately decreases your profit. Also, the neighborhood may simply lose its appeal to new buyers which again leaves you with the house you cannot sell fast (but maybe you can rent it). However, if you are able to flip it with minimum investment, you can expect to earn a considerable amount.

The real estate market is in constant motion which brings both challenges and lucrative prospects. When deciding on how to enter it, what’s crucial is that you feel comfortable with that kind of investment and that you do thorough research before you dive into it. The options are numerous, and so are the opportunities for success and all that remains is for you to pick the road that would suit you the most.

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