5 Ways to Get Into Real Estate Investing

Unlike investing in equities, stocks and bonds, real estate investing can use leverage to purchase a home by paying a percentage of the whole cost upfront and then repaying the remainder, plus interest, over time.

Real estate investing is a popular investment because it provides both income (in the form of rental cash flow) and appreciation (when you sell appreciated property for a profit). It's also an excellent strategy to diversify your portfolio away from equities like stocks, and can sometimes be a great hedge for inflation.

While most typical mortgages need a 20% down payment, in some circumstances, a 5% down payment is all that is required to acquire an entire house (though you can not use this as an investment property, you can read more about house hacking to make this strategy work). 

Real estate investing may provide a high rate of return while also diversifying your portfolio and protecting you against recessions and other economic downturns.

Here are five important ways you can follow to achieve success in real estate investing: 

Real estate investment trusts (REITs):

You can invest in ETFs and mutual funds that hold commercial real estate and residential real estate, such as office buildings, retail spaces, apartments, and hotels. These are publicly traded equities that are a great way to counterbalance risk in stocks and bonds.

REITs tend to offer substantial dividends (payments for shareholders), making them a popular retirement investment. They provide high dividend yields along with moderate long-term capital appreciation. REITs are a great way to dip your toes into real estate investing.

Do-It-Yourself

Individuals with do-it-yourself (DIY) and remodeling abilities, as well as the patience to manage renters, may find that owning rental properties is a terrific option.

Rental homes are an excellent method to develop wealth and generate using real estate investing. This technique, however, necessitates a significant amount of money to cover up-front maintenance expenditures and unoccupied months.

If you purchase a rental property and are interested in making above-market rent, Alcove is a great option for real estate investing. We source qualified tenants, manage tenant logistics, and earn you more with per-bedroom leasing.

Learn more here: Alcove Homeowners

House Flipping

We've all seen the HGTV shows and dreamt of quitting our jobs to pursue fix and flip homes. The profit seem huge! In reality, it's more difficult to do than other passive investment strategies because the market, trends, and tastes can change very quickly.

House flipping is only for those who have extensive knowledge in real estate investing, marketing, and renovation due to the wide knowledge base you'll need to profit.

House flipping necessitates money (either yours or other people's) and the skill to do or supervise repairs as needed. Property flippers seldom spend in renovating their homes.

As a result, the investment must already have the inherent value required to earn a profit without any changes, or the property will be eliminated from consideration. There are more blogs we'll write on this topic in the coming months.

Crowdfunding

Real estate crowdfunding is a method for businesses to raise funds from a large number of people. It's done through internet platforms that serve as a meeting point/marketplace for developers, investors and more.

This one is newer and less talked about, so be sure to perform your due diligence before investing on any platform.

Landlording

It is possible to be a landlord in a variety of ways. One is through basic real estate investing where you put 20% or more down on a property with the intent of renting it out. You'll need to notify your mortgage broker of your plans prior to closing on the home.

Another alternative is to buy a multi-unit building and live in one apartment while renting out the others. This way is known as "house-hacking."

Conclusion

It's feasible to construct a comprehensive real estate investing program by paying a very modest portion of a property's overall worth upfront.

Whether real estate investors utilize their assets to produce rental income or to wait for their time until the right selling opportunity occurs, like any other investment, real estate investing has profit and potential, regardless of whether the entire market is up or down.