Three Ways to Invest in Real Estate
By Miguel Dos Anjos
We will be looking into 3 different ways of making money with real estate. The opportunities are out there. It will be your choice to pick the one that fits your budget, and specific needs best.
1 - Crowed Funding
Crowdfunding funds large projects collecting small amounts of money from a large amount of people. You may not be ready to buy your own home or make a big real estate investment, but that doesn’t necessarily means you cannot invest in real estate. New technology and new investing platforms are making easier than ever before, to invest in real estate with less than $1,000.
Crowdfunding funds large projects collecting small amounts of money from a large amount of people. You may not be ready to buy your own home or make a big real estate investment, but that doesn’t necessarily means you cannot invest in real estate. New technology and new investing platforms are making easier than ever before, to invest in real estate with less than $1,000.
Investments can
be in apartment buildings, offices, retail stores, restaurants and even senior
houses. There are over 100 websites that allow you to invest in a portion of
the real estate market, and you don’t need a lot of money to get in. Even as
little as $500 can get you started. Returns can be on the double digits.
Make sure you do
your homework, some of these sites charge high fees, also, make sure there is
an easy way out when you want to take your profit out, and leave.
Check out the location of the investments to make sure there is solid employment in the area, a good population growth, and high demand.
2 - Become a Land Lord
There are rental companies that help you find, purchase, and manage rental homes. They even
help you sale the home when you want to get out. They do charge a fee.
Choose a location that is in high rental demand. A great way to go about this is to look at those very high demand areas, that often times are over inflated areas. What you might want to do is not by in a high inflated area, but drive 5 to 10 minutes away from that specific location, but not too far away. Those types of spots, still developing and growing may offer you a more affordable deal, and still be in a high demand area since it is not far from where the action is happening.
Real state returns come both in rent and in an increase in the home’s value over time.
Make sure the rent you can charge is high enough to cover all monthly costs, which includes: mortgage, principal, interest, property taxes, homeowners insurance, repairs, maintenance and still allow cash flow.
Develop a down time saving, every couple of years or so you will get a month or more without tenants, or transitioning to a new tenants. Make sure to screen your; to be tenants, to prevent later in time unwanted surprises or headaches.
Make sure you understand the area you will be investing. The area you grew up in; is probably a good example of an area you understand. Visit as many homes as you can during the process of choosing the right home, make sure the area’s economy is strong, healthy, and the local businesses are thriving, there are good schools, high demand, and the properties are not over inflated.
All this takes time to set up, but after finding the perfect unit, where the numbers make sense, finding good tenants, most months no extra work will be required, but simply collecting cash flow. You could start with a duplex, live in one unit, and rent the other unit, and have your tenant help you pay your mortgage. In a good economy after a few years you can start this process all over, and invest in a new duplex, for example, or something that makes sense for your specific location, and situation.
The laws vary from state to state, and even town to town, but usually a 20% down payment and a good credit score around the 700 will help getting a great financing.
3 - REIT Stocks
Another option is to buy a REIT stocks, “Real Estate Investment Trust”. These are groups of properties owned by one developer.
REIT offer high dividends because they are required to give shareholders most of their profits.
There are REIT’s for every type of real estate. Retail is not too hot now because so much shopping is happening online, but warehouse REIT’s for online companies are currently in high demand.
Which Real Estate investing most interests you? Is it on this list? Let us know in the comments below!
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Our video on this subject: Three Ways to Invest in Real Estate
Our video on this subject: Three Ways to Invest in Real Estate
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