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How to make money investing in properties.
Everybody wants to grow their wealth over time. But with the stock market struggling in bear territory and alternative markets like cryptocurrency also flailing, it can feel like a daunting time for wealth creation. Or, you can see it as an opportunity to get into what is historically one of the best investments you can make: real estate. Investing in real estate can often become such a good decision you could wind up quitting your job and doing it full-time.
But how do you get to that point? We’ve got some ideas.
Related: You Want to Make a Living From Real Estate Investment. When Should You Quit Your Job?
As with any investment, you’ll do better if you know what you’re doing. So take the time to learn a little bit about modern real estate investment because it’s a bit more complicated than simply buying property and selling it later.
The Fundamentals of Real Estate Investment Bundle is a great asset to start you on your journey. This five-course bundle is taught by Symon He (4.5/5 instructor rating), a real estate investor and business consultant based out of Los Angeles. He advises private real estate investors on acquisitions and deal structure and consults for startups. He co-founded LearnAirbnb, a boutique consultancy and education blog that focuses on the home-sharing economy.
In this bundle, He will teach you about the work you have to do before getting into real estate investing. You’ll learn how to research properties, identify the best opportunities, and structure deals in ways that work for you. You’ll understand how to analyze both residential and commercial property value and potential and even how to form partnerships to get more buying power. It’s the kind of comprehensive education anybody should have before getting into real estate.
Real estate investment trusts are publicly traded through your regular brokerage account or retirement account, meaning they’re regulated by the Securities and Exchange Commission (SEC). They’re trustworthy assets that allow anyone to get into real estate with just a small sum of cash.
REITs are an outstanding way to dip your toes into real estate because they offer high liquidity, allowing you to buy and sell instantly like stock. You don’t buy a property itself. Instead, you’re putting your money into a fund that you can use to purchase and manage properties to have your money working on hundreds or even thousands of properties and real estate projects across the world. That kind of diversification is hard to find anywhere else, making REITs closer to bonds than individual stocks in terms of security. That said, they also don’t see quite as much growth as many stock indexes.
One of the coolest developments in real estate in recent years is real estate crowdfunding. Online platforms allow individuals to invest directly in real estate projects without needing the money to buy an entire property.
While many real estate crowdfunding sites only accept money from accredited investors, they’re becoming increasingly democratized. Sites like Fundrise allow you to invest as little as $500. Generally, however, you’ll need at least $1,000 to invest in apartment buildings, office buildings, and other projects.
There are a range of investing models on these sites. Some sites pool investor money to buy properties directly and pay dividends through rental incomes. Others lend money against real estate like mREITs. In these cases, you’ll often invest whatever you want toward the fund and get the same return as everyone else. Sometimes, you can pick the individual loans you wish to fund, giving you the potential for greater return (or loss).
Groundfloor is an excellent place to start, which lets you invest for as little as $10, making it a virtually risk-free introduction to real estate crowdfunding.
There’s nothing wrong with traditional real estate investing if you have some disposable income. What do we mean by that? We mean buying a property and then becoming a landlord, or renting it out as an Airbnb or temporary home, or fixing the house up and flipping it.
“Traditional” means several things these days as innovation has swept the real estate space. Of course, you’ll need the money to buy a property in the first place but renting, or flipping houses can be an extremely lucrative option. (Although one that also requires a lot of work.)
If you’re not ready to become a landlord but would still like to earn a little money out of your property, consider renting a room. This is a smart way to help pay the mortgage while giving you an introduction to life as a landlord.
Whether you want to invite a friend to move in with you or have a basement space perfect for an individual, renting out a portion of your house is a nice way to wade into the shallowest waters of real estate investment. You don’t even need to get a lease involved — you could list a room on Airbnb and have temporary guests that are at least partially screened by Airbnb, so you don’t have to worry about getting locked in with a crazy roommate.
Prices are subject to change.
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