If you are looking for how to make money in real estate, this is the blog post for you! This article will go over how beginner investors can make money with real estate.
In a basic definition, real estate means the ownership of land and how it relates to buildings. This includes homes that people own, commercial property such as shopping malls or office buildings, industrial space businesses use for their operations, etc.
To make money from investing in this asset class, you need to buy and sell it for a higher price than what you paid for it. So, for example, buying something today for 100,000 dollars and selling it in the future for $200,000 will mean a 100k profit from your investment.
How to invest in real estate for beginners:
There are many ways to do this through dealerships, real estate investment trusts, or REITs.
Buying a home and renting it out:
Suppose you are starting with real estate investment. In that case, this is a good strategy because there is no leverage needed (i.e., leveraging your investment by using debt). For example, if you bought a home for 100,000 dollars and rented it out for $1000 per month. The rent covers the mortgage payment leaving an extra 200-300 hundred bucks in your pocket each month.
Here is a detailed post on Top 7 Things to Know Before Buying a Vacation Rental Property.
Buying a multi-unit and living in one unit while renting out the other units:
Another strategy is buying real estate with tenants already living there through land contracts or lease options. For example, let’s say you buy an apartment building where your cost will be $100k because you already have a tenant living in one of the units. From there, you can rent out all the other units for 1000 dollars each month which will result in a good income per year income coming into your pocket from this investment.
As a beginner, this strategy removes one of the biggest risks, which is a vacancy. Vacancy means that no tenants are living in a property. As a result, you do not have any income coming in for your investment.
Make money with real estate using REITS (Real Estate Investment Trusts):
Real Estate Investment Trusts or REITs are another way to invest in the market of properties. These trusts can be traded on stock exchanges such as NASDAQ or NYSE, which means that the stock price will go up and down each day based on supply and demand.
The most popular Real Estate Investment Trusts or REITs are:
– Simon Property Group (NYSE: SPG)
– American Tower Corporation (AMT)
– Public Storage Inc. (PSA)
There are many benefits for investing in REITs, including no net-worth requirements, diversification with other real estate assets, professional management teams that run these trusts, liquidity (being able to sell your shares every day), etc.
These companies invest in multiple real estate assets or properties, and they pay out dividends. For example, one popular REIT is called Simon Property Group, which invests in shopping malls all over the US. If you invest in this company through a brokerage account such as with Scott Trade, you can earn a dividend yield per share.
REITs are generally safer investments because they have to comply with SEC regulations. In addition, many of them pay out dividends each quarter. As a result, this is a great strategy for investing in real estate if you look for less risk or volatility in your portfolio.
Another advantage of REITs over other types of real estate investing is liquidity, which means how easy it is to convert your investment into cash. In addition, REITs are much easier and more liquid than owning a home or commercial property because you can buy and sell them on the stock market easily.
Tips to make money with real estate as a beginner
– Do your research and know the market.
Ensure you have enough liquidity in terms of money to invest so that it doesn’t bring down your leverage ratios.
– Always look for opportunities with less risk. This is critical as a beginner because investing can be stressful if you’re worried about losing money on every investment.
– Having a diversified portfolio is key to reducing risk.
– Always make sure that you control your money by having clear-cut goals and investing only what you can afford.
– Keep costs low, which includes finding the best deals for buying properties, managing them yourself every month, etc. This will increase your returns and help you become a more successful real estate investor.
– Or you can invest in a property manager and save your time.
You can also go to the following resources for more tips on making money with real estate as a beginner. They have an incredible community of investors who are passionate about sharing their knowledge, advice, and strategies when investing in properties. You will find tons of information about how to make money with real estate as a beginner. You will also get access to the best tools out there if you become part of their free community.
Real estate can be a great investment to add to your portfolio if you are looking for income-producing assets with less volatility than the stock market. However, it is important to remember that there are no rewards in any investing without taking risks, so take some time and do your research before jumping head first into this strategy.
If you found this helpful and would like to read more about making money with real estate investing, please check out our other blog posts on the topic. We hope we could help clarify some of your questions!
Here are the blog posts that you should check out: 27 Important Questions to Ask When Selecting a Real Estate Broker