How to Start Investing in Real Estate: The Basics Explained

real estate investment

When you hear the term “real estate investing,” what do you think of? Some people think of slumlords, while others think of expensive ventures and a lot of risks. What you may not realize is that all of these are misconceptions.

If you are interested in investing in real estate, you should not let these preconceived notions stop you. Keep reading for some tips on how to start investing in real estate.

Purchase a REIT (Real Estate Investment Trust)

If you choose a REIT, you make an investment, but don’t own actual property. These are often compared to mutual funds.

A REIT is a company. This company owns commercial real estate like hotels, apartments, retail spaces, and office buildings. These usually pay higher dividends than other options, which makes them an investment many people make during retirement or to save for retirement.

If you don’t need to earn a regular income from the real estate investment, you can reinvest your dividends to help grow your investment even more. REITs are not right for all investments, and focusing on the pros and cons and these things to consider will help you decide if it is right for you.

Purchase a Rental Property

If you are committed to the investment you will make, you can purchase a rental property and become a landlord. This provides you with guaranteed monthly income.

The key is finding quality tenants. Rental properties are one of the most common ways to earn money in real estate.

Even though residential properties are considered passive investments, they will require a lot of your time. You need to ensure you have the money and time to handle this. As a landlord, you also can outsource building care and maintenance to a management company.

Flip Properties

Do you love HGTV? Do you feel like you could purchase and flip properties for a profit? If so, this may be the right real estate investment for you.

However, with flipping houses, there is more risk. That’s because a lot of the math that goes with flipping requires accurate estimates of how much the repairs will cost. This isn’t an easy thing to figure out.

If you are new to flipping houses, try to find an experienced partner. This is going to help ensure your efforts lead to success.

Vacation or Short-Term Rentals

If you don’t like the options above but still want to get involved with real estate investments, there’s another option. Consider renting out a room a few nights a week.

You can also rent out an entire home for short periods of time. The amount you can earn doing this depends on your local market.

Now You Know How to Start Investing in Real Estate

If you have ever wondered how to start investing in real estate, the information above should give you a few options to consider. Make sure to review the pros and cons of each option to find the one that best suits your needs.

For more information about real estate, or other topics like sports and business, check out some of our other blogs.