Although investing in the stock market may be an easy way to increase your wealth, there are other ways to boost your net worth. Real estate is one of the best markets to invest in and isn’t just reserved for financial experts or investment veterans. If you want to get started in real estate investing, there are a few common opportunities to consider.
Invest in Rental Properties
Buying your first rental property is a great way to start investing, and you don’t have to wait until you’re already a homeowner or are retired to take the leap. Consider buying a duplex and renting out the other unit to cover your expenses and even live in the building for free. The setup can allow you to earn enough to purchase another rental property in the coming years for more revenue.
House hacking is a popular strategy that allows you to occupy your investment property and still earn money off of it from other tenants. You can also purchase a home and rent out some of the rooms to multiple tenants. It’s a great real estate investment opportunity because it allows you to still apply for a residential loan while buying a home with up to four separate units.
If you’re open to purchasing a rental property, the total expenses should be less than what you plan to charge in rent. You also need to consider the cost of a property manager if you don’t plan on performing any of the maintenance or repairs yourself.
Consider a Franchise
Many people are surprised to learn franchises are available within the real estate industry. Although restaurant and hair salon franchises are popular to invest in, home building franchises make for a great real estate investment opportunity.
Owning a franchise means there’s less risk involved because you’re following a proven plan with the support of the corporation. You’ll receive the training you need to get started and can have on-going support and guidance. The corporation will teach you how to market correctly, and you can immediately have access to their loyal customer base. Although the first few years of starting a business are often the most challenging, a franchise skips the trial and error period for your benefit.
A home building franchise can increase your speed of growth without requiring any business experience, which means it’s ideal for anyone looking for their first real estate investment opportunity. You can achieve success by following the business model the corporation provides without working through any details or issues that come with starting a new independent business. You can also maintain your independence with the day-to-day operations while also having the support of the company.
It’s also easier to obtain financing when you apply for a loan compared to requesting a loan for an independent business. Lenders have more faith in franchises because they know there’s less risk involved, and the franchises have an established reputation in the industry. Franchises are also known for having proven management and work practices, as well as on-going support and advertising across the country. Obtaining a loan is also easier because you may need less funding than starting a new business from the ground up.
Flip Investment Properties
Flipping homes is one of the best ways to get your foot in the door when it comes to investing in real estate. This type of real estate investment opportunity has increased in popularity due to popular home flipping shows on television.
Fortunately, you don’t need a lot of experience or knowledge to get started and can earn a good profit after you tackle your first project. It’s important to be comfortable with some risk involved and have the necessary accounting skills to determine the cost of the repairs to ensure you can earn a profit.
Consider hiring a partner with more experience flipping investment properties to ensure you can learn the ropes when you’re first starting out. You also need to work at a faster pace to avoid losing money on the house over time. Each month you spend fixing it up means an additional mortgage payment you must make on the loan. Living in the home is a way to offset some of the cost as you’re making the improvements. Investing in properties that only require some minor cosmetic work can make it worth your time, money, and energy when living on the property.
Use a Real Estate Investing Platform
Online real estate investing connects real estate investors to developers looking to finance different types of projects using equity or debt. Investors often look for real estate opportunities that allow them to receive distributions each month or quarter if they agree to take on risk while paying to use the platform. This is a great option if you already have a large sum of money to use, even if you’re new to investing in real estate.
Rent Out Your Home
If you’re limited on tools or resources, start by renting out a room in your home or the entire property on Airbnb. It’s a great option if you’re still afraid of risk and aren’t open to any long-term commitment. This option allows you to increase your profit without using your savings or permanently giving up part of your house. Consider making money off of an unused room or floor in the house.
