Have you ever considered investing in real estate? This line of investment presents a rewarding and exciting opportunity, but it can be overwhelming for you as a beginner.
As a first time home investor, you're faced with the uncertainty of whether your investment will break even. You often get confused by the complex terms used in real estate investment as well as the complicated investment models.
However, you don't need to be afraid. Property investment, if done right, is a lucrative investment venture.
Property investment can seem like a tough industry to break into, but not with this beginner's guide for first-time home investors.
Look at the Various Types of Real Estate Investments
The major challenge that you may face as a first time real estate investor is not knowing where or how to invest in property. Here are some areas that you can look into:
1. Homeownership
When you buy a house, it means you're investing in real estate at a certain level. However, there is a big difference between owning your home and investing in other home properties.
When you own a home, you don't actively make money off of it. Your monthly cash flow for the property doesn't increase either.
Do you know that paying off a mortgage is the best real estate decision you can make? Before you consider other investment options, it's advisable that you pay off your mortgage.
This will help you achieve financial peace, and you don't have to worry about losing your home as long as you keep on paying the required taxes and insurance for your property.
2. Rental Property
Are you looking for an additional revenue stream? Then you can consider rental properties. It's particularly beneficial as a retirement investment.
This type of investment can easily add thousands of dollars into your bank account every year. It gets better if it has increased in value over time. You can sell the property and earn good profits if the property has value.
As much as it sounds great, renting out property has its set of challenges. For instance, you’ll incur extra costs such as maintenance, repair, and insurance.
3. Real Estate Investment Trusts (REITs)
REITs allow you to invest in real estate without having a physical real estate property.
How does this work?
If you approach a REIT company for investment, the company will exchange shares equivalent to the amount of money you invest. After the company sells property, you will receive a percentage of the income made.
This is suitable for you if you don't prefer hands-on property investment. However, it's not the best way of investing in real estate. This is because you don't have control of the decisions made by the company about the property they sell.
4. Real Estate Mutual Funds
This operates similarly to REITs although they're a long-term kind of investment. The priority here is to invest in securities that are offered by public real estate companies.
Of course, at the end of every year, you’ll receive the dividend as rewards for the shares you bought in the company.
5. House Flipping
Have you heard of single-family homes or condos being flipped? What does this mean? Flipping a house is whereby you purchase it at a low price, you make improvements and updates on it, and you sell it at a higher price.
House flipping is done within the shortest time possible.
House flipping is a quicker process compared to other investments such as renting or REITs. In just a few months, you can put your house back on the market and get good profits.
However, you won't reap many profits compared to investing in rental properties. You also risk losing money because the renovations and updates can be costly.
Besides, it takes a lot of time and effort, which often will leave you wondering whether you want to devote that amount of energy to a house flipping project.
Before investing in house flipping projects, talk to a real estate agent who can advise you on the real estate potential in the local market.
Choose an Online Real Estate Platform for Networking
With technological advancement, the world is becoming a global village whereby buyers and sellers can carry out business transactions in online platforms.
Various companies in real estate have created online platforms for networking with buyers and sellers from all over the world. These platforms connect real estate developers to investors who want to finance real estate projects.
Are you a property developer or do you want to invest in real estate and profit off of it?
Online real estate platforms will provide you with the best solutions. However, you ought to be keen on which online real estate platforms you engage in. With the rise in cyber-crimes, most of these platforms are scams.
Get Yourself a Property Manager
Are you a first-time real estate investor? What a better way to familiarize yourself with the industry other than hiring a property manager.
They offer professional property investment services that give you the right exposure to real estate business since they know how the business operates.
Besides, property managers do all the heavy lifting for you. For instance, do you own rental properties? A manager will save you the trouble of interacting with your tenants and asking for rent every month.
They will save you the conflict that might arise between you and the tenants. This gives you peace of mind to focus on investing in other opportunities.
Try hiring a property manager today, and you shall see a significant increase in your profits.
How Can You Overcome Challenges Experienced By First Time Home Investors?
First time home investors find it challenging to break into the real estate industry. However, if you're persistent and patient, you will make it. The key secret is to know where and how to invest in various properties within the market.
Check out our blog posts to learn more about real estate investment, home sales, and property management.
