Investing in real estate is a great way to make a lot of money and finally get a chance to do the things you enjoy. From flipping houses to rentals, there are several ways for you to invest in real estate and get great returns. Therefore, as a beginner, it’s important to get a good start. And so today, we’re going to look at some beginner tips when it comes to real estate investments.
Tips of Real Estate Investment
We’ll be taking a good look at two of the most important aspects of real estate investment, picking the right strategy when it comes to investing in properties, and generating income from them.
Picking a Strategy and Sticking to It
There are a lot of strategies around making the most out of your real estate investments. In addition to making things fun and interesting, it also adds a bit of complexity. Therefore, it’s important to stick to a single strategy when starting as a novice.
For example, house flipping is a common strategy where you buy a cheap, worn-out properties and then tidy it up to sell it off for a better price. While you get your money back quickly, that too along with a profit, there are some downsides to flipping. During the period the property is in your possession, you need to be wary of the time spent in flipping the house, managing contractors, and staying within a feasible budget. Finally, once you’re done with the flip, sell it off, pay your taxes and that’s it. The biggest drawback here is the fact that you’re not generating regular income here – there is no cash flow.
This brings along another form of real estate investment – getting rentals. While it comes with its own set of headaches in terms of management, you can hire a property manager to take the brunt of the work and let yourself deal with the property managers rather than the tenants. In the case of rentals, you can generate steady income over time and ensure that you can pay off your investment loans.
There are more investment strategies but sticking to what you understand best is paramount when you’re starting out. In any case, the other investing strategies include:
- Real Estate wholesaling
- BRRRR investing
- House hacking
How Do Your Investments Generate Income?
Knowing how your investments are making money is just as crucial as finding the right deals – after all, if you don’t take into consideration how much money the property will generate, you won’t be able to determine whether a deal is good or not, to begin with.
Essentially, there are four main ways to generate money through real estate investments
- Cash Flow: Thisis your main source of profit from a rental property.
- Appreciation: Over time the value of your property will increase and so, you can sell higher than your buying price.
- Loan Paydown: As soon as you pay off the loans used to buy the property; you are set with a solid investment with nothing due on it.
- Tax Benefits: As a real estate investor you get plenty of tax benefits from the government.
Choosing the right strategy and understanding how the property generates income -once you internalize these two core concepts of real estate investment, you should be making a sizable amount of money.0