Image by Paul Brennan from Pixabay
When you first consider real estate as an investment opportunity, it’s amazing to see how much money there is to be made. People everywhere are jumping on the bandwagon and becoming landlords or flipping houses. Real estate investing is definitely a great way to increase your wealth and save for retirement.
But, how do you get started? What kind of opportunities are there for the first-time investor who isn’t willing to risk it all right out of the gate?
The good news is, there are ways to get your feet wet without betting the bank. Below, we discuss several of these lower-risk options to give you a solid place to start.
1. Investing in Commercial Real Estate
Commercial real estate encompasses a variety of properties including office buildings, retail spaces, apartment buildings, and more. When investing in commercial real estate, you are making money off the operation of the building, which happens daily, and the appreciation of the property, which happens over time.
It typically costs more upfront to purchase a commercial property than other types of properties, but many investors in this niche partner with other investors to make it more affordable. As a new investor on the scene, it would be a good idea to partner with an experienced investor to learn the ropes of commercial real estate investing.
2. Start Investing by Renting Out Your Home
Many homeowners become real estate investors by accident. They own one home, move to a second home, and rent out the first one. In many cases, the rent from the first property covers the expenses of owning two homes, making it a good investment.
The nice thing about this “stepping stone approach” is that you only need to qualify for a regular mortgage to do it.
3. Do a Live-in House Flip
If you’re interested in house flipping, you may want to consider doing a live-in flip since doing so is much cheaper than paying for two properties – one you live in and one you flip.
One downside to the live-in flip is that you’ll be living in a construction zone for quite some time, but if you can stand it, it’s worth the headache. You can increase your profit margins with the live-in flip if you can do most of the repairs and upgrades yourself.
4. Partner with an Experienced Investor
Good investors are always looking for other investors they can partner with on deals. Since real estate investing requires a lot of money, most investors are always low on funds and partnering with other investors gives them additional sources of money to help fund their deals. If you’re not particularly interested in the nitty-gritty of real estate investing or you’d like to learn from a pro, partnering with an experienced investor is a great way to get started.
5. Get into Wholesaling
Real estate wholesaling is a great way for beginning investors to break into the real estate investment game. The wholesaler (You) finds a house for sale that needs work. He contracts with the seller for $90,000. The wholesaler than finds an interested investor to purchase the property for $100,000. The investor now owns a property that will earn him an income once the repairs are made, and the wholesaler walks away with $10,000 in profit without ever having owned the property.
Real estate investing carries a fair amount of risk, but the options listed above are lower risk to help the first-time investor get started.