Every real estate investment journey has to start somewhere.
Jumping into the investment game can be intimidating. There are plenty of new rules to learn, procedures to master, and tips to keep in mind. You certainly couldn’t be blamed for not knowing where to start.
Fortunately, we’re one step ahead of you. If you’re preparing to dip your toes into the world of real estate investing, consider this your definitive beginners guide for all the strategies you’ll need to know.
Making Money with Real Estate Investments
Before you start scouting properties and raking in cash, it’s important to know just how this whole real estate investment thing works. How exactly does investing lead you to a full wallet?
The first secret ingredient is value appreciation. Over time, property value increases as areas change and the economy fluctuates. As a property’s worth goes up, its value appreciates, and that means more money for those who invest in their upkeep. The second essential to real estate investment is rental income, which – as the name implies – involves charging rent from tenants that reside or work on your property. This generates income, and further contributes to value appreciation.
5 Strategies on How to Invest in Real Estate
Now that you know the basics of what real estate investing is, it’s time to dig into how to make the magic happen. Here are five important strategies to remember:
Purchasing Rental Properties
This goes without saying, but purchasing your rental property (as opposed to renting it) means a steady monthly income. It might start out small, but if you stick with the process long enough, invest in upkeep, and allow your property to appreciate, it could eventually produce enough income to be your primary revenue source.
Real Estate Investment Trusts
Is owning a property outright beyond your current abilities? If so, there’s always the REIT route. A real estate investment trust, or REIT, is a company that owns and manages properties in leu of a single owner. By investing in real estate through a REIT, you avoid the hassle of dealing with landlords or expensive upkeep, and you still get to pocket a share of the rental income.
Flipping Houses
This is a popular form of real estate investment, and likely a method you’ve heard of before. This strategy involves purchasing a property (usually residential in nature, like a house or an apartment complex) at a low price. The property is then given any necessary repairs, improvements and rehabilitation it needs before you sell it for a profit. House flipping loses the advantage of a monthly income, but it can result in large single payouts.
Prehabbing
This strategy is similar to house flipping, but involves less investment of time, energy and money. Instead of completely renovating or improving a property, you simply provide a few simple cosmetic changes, sell the property to another investor for a higher price, and allow them to either complete the renovation process or sell the property again.
Real Estate Investing Platforms
An investment platform operates in much the same way as a REIT; by connecting with fellow investors and financing real estate projects, you earn money through rent. This method won’t yield as much cash as owning the property, but it’s an effective strategy, nonetheless.
Why Invest in Real Estate?
All of these strategies beg the obvious question: why make an investment in real estate? What benefits can they offer over other forms of income or investment?
One of the biggest benefits is in the long-term stability of the real estate market. Even when economic uncertainty rears its ugly head, property investment remains a strong option for investors. There are also tax incentives, including the possibility of paying off debts and scoring some deductions. Real estate investment also builds equity, diversifies portfolios, and protects investors from inflation.
Rental Properties in Columbus, OH
Are you ready to get jump in and make your first real estate investment? The experts at DRK are always on hand to answer your questions and help you find the ideal property.
Take a look at the purchase-ready rental properties available in the Columbus, Ohio, area.
Until next time,
Other blog posts you may enjoy:
Benefits of Leasing Office Space
How to Buy Investment Property
How Much Tax Do You Pay When You Sell a Rental Property?
