Getting Started With Real Estate Investing

By
Industry Observer

Is real estate investing a good side hustle?

Well, when it comes to diversifying income or looking for ways to make extra income, real estate investing seems to be one of the most common options that is recommended.

This is certainly for good reason. Real estate investing can be an immensely lucrative side hustle opportunity, and there are plenty of ways to get started in the industry.

However, investing in real estate can also be a major decision to make, and an inexperienced investor can quickly get burned if they don’t know what they are doing.

So, I’m going to break down some of the most common ways to get started with real estate investing, as well as some common mistakes you should avoid.

1) Get Involved With REITs:

REIT stands for real estate investment trust, and refers to a company that owns a group of real estate operations that generate capital. For example, the Digital Realty Trust is one of the largest REITs in the world, and has a market cap of over $20 billion.

So, just as you might in an ETF that focuses on the energy sector or banking, you can invest in REITs to start getting your foot in the door of the world of real estate.

REITs are a great option to get started with real estate investing without needing a lot of capital or taking on too much risk. Many REITs have holdings like income paying properties, apartment complexes, and business buildings, so you can benefit from owning a small slice of the pie without having to purchase a building yourself.

Plus, many REITs actually pay dividends, so this can be a great way to generate some passive income.

2) Become a landlord

My brother recently became a landlord in a popular college town, and let me tell you, the rewards can certainly be worth it if you are willing to put in the work and some capital.

The idea of renting out your home is already becoming more popular thanks to gig apps like AirBnB and the gig economy in general, but the idea of renting out a building for income isn't anything new.

Buying a condo or home for the purpose of renting it out to students or family is a more serious way to get started in real estate investing, but you may find you are able to pay off your entire mortgage over the years from the rent you charge your tenants.

Now, becoming a landlord isn’t easy work. Outside of requiring the capital for a down payment, you need to consider a few other factors such as:

  •         The average monthly rent for a similar building in your area.
  •         The cost of property taxes, maintenance fees, condo fees (if applicable), and future upgrades.
  •         The cost of insurance.
  •         The turnover rate of tenants and if you can reasonably expect full or almost-full occupancy.
  •         The risk of damage – especially relevant for student towns.

If the math checks out and you are willing to take on a rental property to earn from a holding in real estate, this might be the right path to take!

3) Flipping Houses

If you’re decently handy and have experience with home renovation projects, flipping houses is a third way to make money through real estate.

Houses or condos in need of some serious TLC go on the market all the time. Age, neglect, or changes in design preferences can make a house feel outdated and in need of repair. If you can successfully identify a house that has room for improvement and would remain reasonable terms of the cost to upgrade, you might have a potential flipping opportunity on your hands.

However, keep in mind you will have to invest a fair amount of ‘sweat equity’ into your flip. Projects like refinishing a bathroom, basement, or even jobs like painting can take time and money.

Additionally, always be sure to have a professional appraisal and inspection of your property. You don’t want surprise expenses like the need for a new roof or plumbing problems to cut into the margin you hope to gain from flipping the property.

How To Avoid Getting Burned With Your Investment

As mentioned, getting involved in real estate investing can sound like a dream come true. I mean, who doesn’t want to own an income-producing asset or diversify their income?

If you want to reduce your overall risk, here are some key pieces of advice to keep in mind.

1) Never invest more than you can afford to lose: It doesn’t matter if you’re just dabbling in REITs or building an investment portfolio/asset group that is almost entirely based in real estate. Never invest money that your life depends on.

2) Do your due diligence: Research the companies you buy or any property you are considering thoroughly. Don’t be afraid to ask for professional help either.

3) Diversify: Real estate investing is an incredible opportunity, but this doesn’t always mean you should turn your back on other income producing options like investing in ETFs or mutual funds.

4) Be realistic: Don't take on more than you can handle, and have reasonable expectations for the type of returns you will see in a given year.

Well there you have it folks!

If you have ever wanted to dabble in the world of real estate investment but haven't known about the options, here are 3 common ones to consider!

Hope you enjoyed!

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Rainmaker
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John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Welcome to the ActiveRain community. Congratulations on your first post.

Aug 22, 2019 03:27 PM #1
Rainmaker
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Annette Lawrence , Palm Harbor, FL 727-420-4041
ReMax Realtec Group - Palm Harbor, FL
Making FLORIDA Real Estate EZ

Brad,
Welcome to Active Rain and for a really good 1st AR blog.

There are many ways to become a real estate investor.

However, I do not think owning stock qualifies as INVESTOR.

That's like saying I am car maker if I own some GM stock.

However, owning the stock and learning how to read and interpret the annual reports is a great beginning to entering the real estate investor world. The reader will know where the money is. How to plug in is another challenge.

Entry points and exit strategies are almost unlimited.

We are eager to read more of your insights.

Make sure you stop by the Q&A section to intro your blogs.

And welcome aboard the Rain Train.

Best of success,
Annette

 

Aug 23, 2019 02:41 PM #2
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Brad Rutherford welcome to ActiveRain and congratulations on successfully posting your first blog on this site.

Aug 25, 2019 03:52 PM #3
Rainmaker
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Sara Wagner
The Woodland Companies - Adams, WI
Stevens Point Rentals

Welcome to ActiveRain, I hope that your participation here helps your business to grow.
Btw, I followed your blog, and would be honored if you followed mine.
Thank You!

Aug 26, 2019 05:34 PM #4
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Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
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Welcome to Active Rain, looking forward to reading many more of your posts, let me know if there is anything that I can do to help as you get started here.
All the best of success to you.
Bob

Oct 24, 2019 09:40 PM #5
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Brad Rutherford

Passionate about online marketing & networking.
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