What do world-renowned billionaires Dan Gilbert, Peter Woo, Donald Bren, and Hugh Grosvenor have in common?
Two words… real estate.
Real estate is one of the most lucrative investments you can make, which is why so many people throughout time used it to build wealth. So, how can you get started?
Here are some things to think about when you are learning how to invest in real estate.
Decide Why You Want to Get Into Real Estate
As with every form of investing, you should take the time to learn exactly why you want to get into real estate. Knowing what you’d like to gain from your real estate investment will help you create a successful roadmap.
Aside from being a steady, proven, lucrative investment, you will also enjoy:
A Big Influx of Cash
Having more cash flow is important for an investor. Real estate is an asset that you can liquidate in plenty of different ways.
This can happen by selling it, refinancing, and renting it out to tenants, among other ways. By having this large influx of cash, you’ll have more money at your disposal to use for other things.
You can turn this cash into seed money for other investments that yield even more profits. Capital for investments is often hard to come by, so having more liquid at your disposal is always a good thing.
Residual Income Streams
Residual income streams are an essential part of your wealth-building journey. It’s a form of income that doesn’t require you to trade time for money.
When your methods of generating income aren’t limited to the amount of time that you have in a day, the sky is the limit with how much you can earn. Whether you rent the property, turn it into an Airbnb, or other strategies, you’ll be able to keep your bank balances healthy.
Rounding Out Your Wealth and Net Worth
Many people think of cash when they consider wealth, but acquiring assets is just as important. Real estate is arguably the most solid asset that you can acquire, which is why the “real” term is so fitting.
When the dollar drops and inflation goes through the roof, you will be glad that you have a beefy real estate portfolio backing you up. It acts as a hedge against changing economies and gives you the chance to chart out your future with plenty of options at your disposal.
People that build their wealth tend to diversify their portfolios with many different types of assets so that they’re not dependent on any single form of currency. The stock market gets volatile as well, so it makes sense to strengthen your net worth with real estate acquisitions that will keep appreciating in value over the years.
Purchasing a house and making improvements to it over the next several years will give you an amazing return on investment, especially if you buy it in an area that people are moving to.
Few assets gain value like real estate, which is why it should be a cornerstone for your portfolio.
Property to Pass on to Descendants
Wealth builders understand that the real game is played well beyond the years of life that you have on earth. Think beyond your lifetime and start considering ways that you can set your future generations up for financial success.
Having real estate assets can help you pay for your kids’ college and get them started with their own portfolios. It’s easily passed on to descendants once you die, so you won’t have to worry about whether or not they will be able to financially take care of themselves without you.
Even though you might not be around to see the fruits of your labor, you will age peacefully in your golden years knowing that your kids and grandkids are taken care of well beyond this lifetime.
A Deeper Understanding of Investing and Wealth
One of the biggest reasons to invest in real estate is that it teaches you a lot about wealth and business. The principles that you learn when acquiring, selling, or managing properties are universal to other aspects of business and commerce.
This could be just what you need to dip your toe into the water and pique your interests in other forms of investing and entrepreneurship. Whether you decide to go full-time into real estate or open a new business, real estate can set the foundation.
Ways to Invest in Real Estate
Now that you have a better understanding of why you want to invest in real estate, it’s time to explore your options. You’ll be glad to know that these options are plentiful.
Learn about the different real estate classes available so that you can diversify your wealth and income. Here are some examples of real estate investing that can pay off for you:
Buying Properties to Rent Out
Some of the best real estate investors also become property managers. Whether you’re talking about a house, a duplex, or an apartment community, people always will need a place to live.
Buying a property is a hurdle that many people can’t cross right away, which is why there will always be a healthy renter’s market. Once you buy a property and have the deed, you are free to rent it out to people that are looking for a place to live.
As a landlord, you are responsible for upholding certain laws and values so that people have a safe and suitable place to live. If you want a stress-free approach to renting out properties, consider hiring a property manager that can address things like collecting the rent, offering tours, collecting payments, and handling your business accounting.
Becoming an Airbnb Host
Like Uber, Netflix, and other industries, Airbnb has used technology to create disruption to a long-standing way of doing business. It makes it easy for you to put your property on the market for guests nightly, weekly, long-term, or however long they want to stay.
Not only is this an alternative to hotels and vacation home rentals, but it’s also an incredible investment opportunity for you. You can potentially bring in more money than you would with traditional rental contracts, since there is no cap on how much revenue you can generate.
If your real estate property is located somewhere that is attractive to tourists, you can also hike the price up to generate more revenue during peak season. Guests are loving Airbnb stays because they offer a more home-like feel than hotels, and often have access to amenities like ovens, refrigerators, and full bedrooms.
Look into Airbnb loans to help you pay for the property so that you can become a host. This way, you can get started with an Airbnb investment without having to fully come up with your own seed money.
Flipping Real Estate Properties
One of the main ways to get into real estate is by flipping properties. This involves buying a property at a low price, fixing it up to create more equity and value, and selling it for a profit.
Die-hard real estate investors love flipping property because of the thrill of the hunt. There is also plenty of potential for lucrative gains if you understand real estate and what kinds of improvements are best able to generate revenue for you.
You can also seek fix and flip loans to help you engage in this type of investing. This gives you a quick advantage and an avenue to secure a property that will give you a good deal.
Making Commercial Real Estate Investments
Don’t forget about commercial real estate when you’re considering your investment avenues. Just like people need a place to live, businesses also need places to grow and expand their enterprises.
You can scope out some zoned commercial real estate properties that can serve businesses in different industries. In fact, if you are going to build a real estate portfolio, it is best that you diversify it with a mixture of real estate and commercial so that you are protected from changes in the economy.
Investing in Real Estate Investment Trusts (REIT)
There are also some real estate investment options that you can try out that don’t involve even seeing, touching, or walking inside of a real estate property. You can look into investment trusts that allow you to grow your revenue.
When you understand the value of a Real Estate Investment Trust (REIT), it’s clear how much potential it can bring to your investment portfolio. Investing in a REIT is very similar to buying stock shares or shares of a mutual fund.
They spread your investments throughout many segments of the real estate market, rather than putting all of your eggs in one basket with a single property. This gives you immediate diversification and a low buy-in.
Advertising a Room for Rent
If you can’t quite afford to purchase a property, you can still get started with real estate investment. All you need is an available room in your home and a willingness to share space with another person.
You can clean the room up, advertise it for rent, and list it on the market. This gives you a passive revenue stream that can help you grow some profits to pay your mortgage or other bills. Renting out a room is also a great way to dip your toe into the water as you get used to real estate investing.
Purchasing Land Real Estate
Don’t forget about land when you are looking for real estate investing opportunities. Land is one of the best ways to get into real estate since it appreciates in value quickly and is rare and finite.
You can always build new houses but there’s a limited amount of available land on earth. So when you purchase some land, the value is exponential, and you can get a great ROI from it.
This is another way to diversify your portfolio so that you can build your wealth without it being interrupted by the economy.
How to Invest in Real Estate
It’s also important that you take the right steps once you are ready to push forward and spring for a real estate investment.
First, research your next move and come up with a plan. Doing this is similar to how a business owner first forecasts the market and generates a business plan. This should include your goals, an idea about the current state of real estate, and step-by-step plans for how you will make it happen.
Get your money and credit in order so that you have the finances to make a move. Look into loans, lines of credit, and getting your hands on some cash to help you make the right investment. Consult with professionals of real estate, such as agents, lawyers, and professionals that can market your property for you.
These professionals will help you close on the property and execute your plan so that you achieve the objectives that you are hoping to achieve.
Investing in Real Estate Today
If you are learning how to invest in real estate, these strategies will be useful to you. The sky is the limit with how big an investor you can become when you use these tips to help you.
Intrust Funding can help you out when you’re trying to get into real estate investing. Get in touch with our customer service department to speak with a loan consultant, e-mail us, or call the office at (425)272-9260 for more information.