Unless you’ve been living under a rock, you’re probably aware of just how lucrative real estate investing can be. The current economic climate has also created some bountiful opportunities for savvy investors. In this article, I’ll go over five ways you can begin to build your real estate portfolio, some you might have never even considered. It doesn’t matter if you’re already a seasoned investor looking to diversify your portfolio or a college student with $200 in their pocket; there is something in the market for everyone.
If you’re a do-it-yourself buff and have a monk’s patience, then Purchasing homes and renting them out might be the path for you. There are two simple ways to dive into residential real estate:
- You purchase a single property such as a condo unit or single home and then rent it out for an amount that exceeds what it costs you to maintain it.
- Buy a large enough residence that you can live in while you rent it out. These are known as multi-family units. You can either start with a multi-unit property or convert a single property into multiple units. As previously stated, the added benefit is that you can reduce your living expenses by living in one of the units. This also makes the management of property easier.
Dabble in Commercial Real Estate
Commercial real estate is a property that is leased out for business and retail purposes. Unlike residential real estate, commercial real estate investors lease out and collect rent from the companies that use their space. Commercial real estate investing provides many advantages, from significant cash flow returns, lower competition, and returns on investment almost triple that of residential property. The obvious downside is a large amount of money needed to begin with and the extensive research to determine the right property to acquire. Traditionally, it could be a challenge to manage deal flow for both commercial and residential, that’s where you might want to start looking at a CRM for real estate to help.
Buy REITs (Real Estate Investment Trusts)
If you see real estate as a potential investment for you but don’t want to get entirely hands-on, REITs might be perfect for you. A REIT is formed when a trust/company uses investors’ money to purchase real estate and then pays back dividends to investors much in the same way stocks do. REITs are a solid investment for those looking for a steady income. On top of that, compared to the other types of real estate, REITs allow investors access to more considerable assets, such as commercial buildings that are generally too expensive for the average investor.
Real estate wholesaling is when you find a buyer on behalf of someone looking to sell their house and collect a commission/profit based on your involvement. Unlike the other property investment plans, you don’t need any money to get started. The process breaks down as follows:
- You Contact a seller to establish the price of their property.
- Find buyers and pitch the property to them at a higher price than you agreed upon with the seller.
- When the sale is finished, you collect the difference between the two prices.
Rent Out a Room in Your House
Finally, if any of the previous ideas seem daunting to you, you can test the waters by merely renting a portion of your house. There are several ways. You can do this:
- The first is to rent part of your home through a site like Airbnb. You won’t have to take on a long-term tenant, and Airbnb’s host guarantee provides you with protection against damages.
- The second option is to rent a spare room in your home or just your basement. If you are considering purchasing a new home, you can opt for a duplex property. You can live in one apartment and rent out the other. Renting a portion of your house will allow you to get a feel for what it’s like to be a landlord without the sizable monetary investment required in purchasing residential and multi-family unit properties.
Home For Rent Sign -DepositPhotos