How new investors can start investing in real estate

How new investors can start investing in real estate

As lucrative as real estate investment might be, it is not for the fainthearted. But if you properly invest in real estate, it can offer a lot of rewards both in the short-term and long term. Generally, Real estate investment is both lucrative and flashy. This is an investment platform that can help you diversify your already existing financial assets and give you extra income stream. One of the many problems people face today as far as real estate investment is concerned is that most new investors do not know how to invest in real estate or where to start. 

If this is your case, you have several options available to you. First, you can start investing in real estate by investing in rental properties. You can start by house hacking whereby you occupy a small investment property by either renting out one or two rooms or by renting out a unit in a multi-unit property. House hacking is an option new real estate investors should consider since it allows them to buy properties with several units. This enables them to not just rent out some units, but also qualify for residential loans. Of course, it is possible to buy a property and rent it out entirely.

But if you opt for this option, ensure that you find a property that has combined expenses that are lower than the monthly payment you will be receiving as rent. If you think becoming a landlord in this manner is not ideal, consider hiring a property manager. Managing your own property as a new real estate investor is an advantage since you will learn many things about the USA real estate industry. This will give you enough experience going forward especially if you decide to buy more properties in the future.

Apart from house hacking, the second option is to fix up a property and resell it. With this option, you will basically have to buy an underpriced property that needs some renovation. After purchasing the underpriced property, you renovate it cheaply and resell the property for a small profit. This strategy is known as house flipping. Although house flipping sounds easy on paper, in reality, it involves a certain element of risk. This is because the mathematics behind flipping generally requires an accurate figure of how much it will cost to do the repairs. The math is not easy to calculate.  

The best suggestion would be to work with an experienced professional who already knows How to invest in real estate. While you may have enough time and capital to contribute, you can use a contractor who has enough experience at estimating house repair expenses. You can also partner with a property manager who knows how to manage such projects. 

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