5 Best Ways to Invest in Real Estate For Starters

Real Estate Investment

last update Sunday, October 23, 2022

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Are you planning to try investing in real estate? The real estate business is a tough job but if done correctly, you can make great profits. It can help you diversify your existing investment portfolio and an extra income. There are different ways to invest in real estate, and some investments don’t require very much effort. If you are new and looking for ways to invest in real estate, keep on reading.

1. Purchasing REITs

REITs or Real Estate Investment Trusts let you invest in real estate without the hassle of having a physical real estate. These companies own commercial real estate like office buildings, apartments, hotels, etc. REITs normally pay high dividends to investors, so if you are planning to look forward to buying REIT, go for it. However, there are some complexities regarding REITs as they vary from company to company. The amount of risk depends on the type of REIT you are paying for. For beginners, a good rule of thumb is to stick to publicly traded REITs which you can buy from brokerage firms.

2. Investing in rental properties

Rental properties are by far the easiest and most profitable investment for a newbie. This is because the basics of investing in rental properties are quite easy to understand. In this setup, a buyer buys a rental property and rents it out to the tenants. You can either rent out the entire home or a few rooms as per your choice. You can also hire a property manager to show your potential clients one or more rental properties.

3. Flipping investment properties

Flipping a property means investing in an underpriced home and renovating it as inexpensively as possible so that selling it gives a decent profit for the seller. Flipping requires precise estimations of repair expenditures. If you think the home purchasing and the repairing costs demand a heavy price, you can find an experienced partner to calculate and share the expenses. One risk to watch out for is that the longer you keep the property the more mortgage you will pay. A way to lessen the risk is to live in the house and fix it up while you are staying there.

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4. Renting a room

If you want to invest money by not renting your entire home, try renting a part of your home to sites like Airbnb. It’s a low-key form of house hacking. The more desirable your home and the part you are renting, the more potential customers. Another advantage for you is, that you don’t have to take on a long-term tenant and can certainly have the benefit of allowing guests in your home.

5. Using real estate investing apps or online platforms

Online platforms such as Fundrise, connect real estate developers to investors who are looking for financing projects. They do so by either providing loans or equity. The investors lend the borrower money for personal needs or home renovation. Like many real estate investments, you can’t easily unload them the way you trade a stock. Many of these platforms are open to investors that have a net income worth of $1 million or earned more than $200,000 in each of the last two years. If money isn’t an issue for you or you have the enlisted income then you can invest in these platforms.

Here is the list of the top 5 best ways to invest in real estate. My advice for you is to think about how much time you can spare dealing with these investments along with the overall cost to deal with before taking any action. This way it will be easier for you to plan and execute.

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