Are you interested in investing in real estate? If so, you're not alone.
This is a popular pursuit among Millennials, Baby Boomers, and everyone in between.
People of all ages are investing in real estate, and 34 percent of American adults consider it to be the best approach for investing their money.
It doesn't matter if you want to try and make millions or just save some money for retirement.
If you've been wondering how to get into the real estate business, keep reading. Everything you need to know is explained below.
Benefits of Investing in Real Estate:
There are lots of reasons to consider investing in real estate. Some of the greatest benefits of real estate investing include:
- Build equity for the future
- Generate passive income
- Save money for retirement
- Diversify your investment portfolio
- Protect yourself from inflation
- Enjoy tax benefits
- See faster returns
- Boost your local economy
- High potential returns
Real estate investing is also highly flexible. You can rent out your properties and work with a property management company or fix houses up and flip them. The options are endless.
How to Get into the Real Estate Business:
As you can see, there are lots of reasons to consider investing in real estate. But, how do you get started?
Here are some guidelines that will help you make a splash in the real estate industry.
Figure Out Your Financial Stage:
Start by taking a look at your finances and figuring out your current financial stage. Are you just barely surviving and looking to make extra income, or are you financially stable and looking for new ways to invest your money?
There's no right or wrong answer, here. The purpose of this step is to just figure out where you're at and how much you can afford to spend on an investment property.
Once you've got a good understanding of your finances, you can start setting money aside to put toward your first property.
You may also want to spend some time paying down your other debts. The less debt you have, the easier it will be for you to get a loan or pay for a property upfront.
Think About Your Investment Strategy:
Next, it's time to start thinking about your investment strategy.
There are lots of different ways that you can go about investing in real estate. Some of the most popular options include:
- Fix and flip an old or inexpensive house
- Sign a contract for a rent-to-own home
- Purchase property and rent it out to tenants
- Purchase a vacation property for short-term rentals
- Purchase commercial property
You can also invest in real estate without actually buying property. For example, you can invest in a Real Estate Investment Trust or Real Estate Mutual Funds.
If you're not interested in managing a physical property, this can be a great way to reap the benefits of real estate investing.
Consider Your Target Market:
If you plan to purchase a property and flip it or rent out a property for long- or short-term rentals, it's important to think about your target market.
When you're looking for a home to purchase, think about the location, the schools in the area, and the crime rate.
Are there lots of job opportunities in the area? Is it located in an up-and-coming neighborhood?
You might also want to think about factors like access to public transportation, walkability, and neighborhood covenants and HOA rules.
Consider Your Investment Criteria:
It's also important to think about your requirements for the properties in which you're considering investing.
For example, what kind of properties do you want to purchase? Single-family homes? Commercial properties? Apartment complexes?
It's also important to think about how much money you need and want to earn each month from these properties.
It's okay for your investment criteria to change over time. But, you need to at least have some guidelines when you're getting started so you know which kinds of properties you ought to be looking at.
Find an Investment Real Estate Agent:
If you're having a hard time finding properties that meet your investment criteria and align with your target market -- or if you just don't have the time to look for these properties -- you might want to consider working with an investment real estate agent.
You can use a site like BrokerBreakUp to find an agent in your area who will help you find the best properties that meet all your requirements and is within your price range.
Purchase Your First Property:
Once you've done all the prep work and saved up enough money, it's time to purchase your first property.
If you're a young or new real estate investor, most real estate experts agree that your first investment property should be the home you live in.
Even if you plan to flip it later, it's great to live in that home for at least a little while before you decide to sell it or rent it out.
Start Saving for Your Next Property:
After you've purchased for your first property, it's time to start saving for the next one.
Work with your real estate agent to find properties within your budget and consider whether you want to rent them out, list them as vacation properties, or fix and flip them.
Pay Down Your Debt as Quickly as Possible:
It's also important to work on paying down your debt as quickly as you can. Remember, less debt equals more money to invest in the future.
Keep your debt-to-income ratio low so you can qualify for mortgage loans more easily later on.
Want to Learn More About Real Estate?
You now have all the information you need about how to get into the real estate business.
Do you want to learn more about keeping your investment business afloat or diversifying your real estate portfolio?
We've got tons of great information to help you accomplish all your real estate investment goals.
This article on converting a home into a rental property is a great starting point.