How To Start Investing In Real Estate

There are many reasons as to why you should start investing in real estate. From passive income, equity and tax breaks, you can certainly see the benefits of choosing real estate over other investments.

However, like with any investment, it comes with risks. Be sure to perform extensive research before taking that first step. This article will explain how to start investing in real estate and what you can expect.

Benefits

One of the main benefits of owning real estate is that it can provide you with an additional monthly income. This is especially prominent if you’ve purchased the property outright and can keep the monthly rent payments for yourself, rather than putting them towards the mortgage.

Having real estate in your investment portfolio boosts your diversification. If you also have investments in stocks and these are suffering because of problems with the economy, the properties you own could still be increasing in value, offering you protection from your other investments.

Ways to invest in real estate

There are numerous ways to begin investing in real estate, depending on your exact requirements. We’ve outlined our top three below:

Renting properties

Owning and renting out your properties is a great way to receive a regular income and maximise your capital through leverage. To increase the value of your property, it’s worth considering the benefits of renovating the property before letting it out.

If you’re into DIY, perhaps you could create some basic furniture, such as storage units of fitted wardrobes to make the house more competitive on the market. You don’t have to break the bank by purchasing brand new items, as you can use drawer runners or tools to help you build the furniture yourself.

Real estate investment groups (REIGs)

These are designed for people who want to own their own rental properties, without having the hassle of running them. They are small mutual funds that invest in rentals, where a company buys or constructs a set of flats or apartment blocks to allow investors to purchase them via the group.

A sole investor can own multiple units, but the REIG manages them, from handling maintenance to dealing with tenants.

House flipping

This type of investment is typically for those with experience in real estate valuation and marketing. Real estate flippers differ from typical landlords, as they look to sell undervalued properties that they’ve owned for less than six months, for a profit.

Typically, flippers don’t invest in improving the value of the property. The property must have a significant value already, without the need for any renovations. Seek advice from a professional if this sounds like something for you.