It is really surprising to know that we can earn a lot of wealth by investing in real estate. Making money in real estate is broadly trending today!!
Do you know the actual strength of investing in real estate? No, it is not the appreciation but it is in rental income. Nearly all people think that real estate investing is just impossible because it is expensive. Well, it may be a bit expensive, however, there are various other ways to be involved in real estate even with $ 500.
Let’s discuss 6 different ways to invest your money in real estate. These ways will help you to be involved in real estate investing without a tag of real estate investor & without a lot of money as well!
1) Rent Your Old Home
Do you know something about the “accidental landlord”? It is when a person lives in one home, shifts and rents out his/her old home. An “accidental landlord” becomes a landlord when they purchase another home (second home).
Sadly, many single-family houses end up being a horrible rental property as they fail to make a profit. Using appreciation only is a bad reason to purchase a property.
You will have to plan everything to allow your strategy work. Importantly, you should aim at purchasing a home to a neighborhood offering high rents that should be higher than the expense of the mortgage & all other expenses.
When you move to a new place and rent your old home, you just evolve into a real estate investor!!! The total cost to use this option is under $ 20,000.
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2) Carry Out Live In Flip
Live in Flip may be a bit different but believe us it is a relative strategy!!
The main objective of this strategy is to purchase a livable home that needs extreme work. Work means making hardwood floors, enhancing the kitchen or bathrooms, constructing anything extra or completing an attic/basement.
I know you will have to live in a zone where construction works will be going on for a while. But the good part about this that the possible tax-free profit will be great.
Do you want to know the process?
Initially, you will have to discover a bearable property & also calculate the ARV (after repair value). You can do this easily with the help of a real estate agent or else can review comparable sales on your own.
The second step is to calculate your rehab budget. If you are skilled enough, work your own to make some sweat equity. If you can’t do it, find a cheap contractor to get the same done at a cheap price.
The great advantage of this plan is the exclusive tax benefits. A normal flip will include all types of taxes on your profits. But this strategy is fairly low-risk.
The total cost to use this option is $ 30,000.
3) Purchase A Turnkey Property
If you are not comfortable with shifting so much or residing in a construction zone, then you should consider the strategy namely the turn-key investment property.
Like the name itself, a turnkey firm takes care of nearly everything for the customer. They even help them to search, examine, purchase and maintain the property.
Not only every Turnkey company differs but they do not even serve the same services. Let us know the basics:
- Searching & Examining the Turnkey Property
While some companies purchase & directly fix the property, other companies use a chain of rehab companies to discover their finished properties. Some also offer fixer-uppers & serves you the total estimated repair expense.
- Purchasing the Turnkey Property
Nearly all the turnkey companies maintain relationships with numerous mortgage brokers or even private lenders which certainly help the deal to happen. It is still primary that you should be financially stable & qualified to buy.
- Maintaining the Rental Property
Turnkey companies can either directly maintain the property or else associate you with any reputable management firm. Their prestige depends on this piece and hence they take it very seriously.
- Cost of Turnkey Properties
Turnkey companies aim at comparatively inexpensive properties ranging from about $50,000.
It needs almost $30,000 to begin, although it can differ. As you will not be residing in the property, you will need to acquire a conventional loan & 20 % down as well. On a regular $100,000-150,000 home, the closing costs is $20-30,000 or above.
- Risks Under Turnkey Properties
There are many risks while using turnkey investing. Firstly, there is a large inducement for turnkey providers. They charge top dollars for the properties. And you will not even understand anything if you are not well-known with the out-of-state market. Hence, do good research before purchasing.
4) Partnership With Other Investors
Working with other investors is a good option for those who do not want to be involved in the basics of real estate investing, however, somewhere wish to add up the real estate to your portfolio.
A good investor will always look for partners on deals. A good investor is good at searching out good deals. Investors finish more deals just by partnering.
You know what? More the partners, more the deals get done & more money everyone earns!!
Some common ways to Partner:
- House Flipping (Above $ 25000)
- SFR & 1-4 Unit Multifamily Rentals ($35k to $50k)
- Commercial & Apartment Constructing Syndication ($25k to $100k)
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Investing In Crowfunded Real Estate
This is a new game in the town. Basically in crowdfunding, a group of investors is allowed to pool their funds in a particular project as well as share the final profits.
Crowdfunding is typically internet-based syndication.
It is may not be a new approach but it is a fresh way to do deals. However, the primary difference between syndicating & crowdfunding is that deals of crowdfunded can be easily advertised online but with an accredited investor limitation.
7) Purchase REITs (Real Estate Investment Trusts)
A real estate investment trust or REIT comprises a large range of offerings with a large range of real estate.
The good thing about a real estate investment is that you can add real estate additionally in your portfolio by easily purchasing into a REIT using your brokerage account.
Sadly, the returns are not as satisfactory as direct investments or syndication in real estate. However, they do not help grow diversity as well as reduce volatility in your portfolio.
These were the 6 best ways to invest your money in real estate.
Discover a real estate that will work for you & do pursue it!!!