Most people dream of owning their own homes to forget about rising rent costs, start a family, or simply have more space. However, what many people don’t consider is that real estate is a valuable investment. Real estate is a great way to gain financial freedom; frankly, it always has been. Unfortunately, there are very few guarantees when investing, but overall, it’s a safer investment option than high-risk stocks.
Experts agree that real estate investing is worth it. So whether you’re looking to build wealth or just want to make a return on your investment, here are just ways you can start investing in real estate.
Homeownership
Homeownership isn’t just a way to get more space or a backyard for children and pets– it’s actually a real estate investment even though it might not feel like it. Real estate is the only type of investment you can use while you get a return on your investment, allowing you to live in the home with your family while building equity.
Homeownership is one of the best investments you can make for financial security for the future. Not only are you saving money by not having to deal with rent prices that go up yearly, but you’re investing into your future. If you stay in the house for the rest of your life, you won’t have to worry about paying for expensive housing during retirement, and if you choose to sell your house before retirement, you’ll be able to increase your wealth.
Developing wealth and equity is a long-term investment strategy, so your home will ultimately be an extension of your savings as you pay off your mortgage loan. Then, when you finally go to sell the house or pay it off, you’ll be in an even better financial position because you won’t have to pay the cost of housing.
Purchasing a house is the dream of many, and it’s an investment in real estate that doubles as an investment in yourself. Unfortunately, there are cons to being a homeowner, including high down payments. You should also be careful not to buy a house you might not be able to afford in the long run.
Rentals
When investing in real estate, you can invest in long-term or short-term rentals to start paying back the mortgage and earning money immediately. Of course, you could end up with horrible tenants, but if you properly background check them, you can set yourself up for success. If you can figure out a way to ensure your tenants can be trusted to properly take care of the rental, you can start making money quickly, even after all your operating expenses are paid.
While you can’t expect much at first, it can help you pay for other bills, such as your home mortgage or any debts. Long-term rentals are also a good way to increase your retirement income. Ultimately, as tenants pay their rents and the mortgage is paid down, your passive income will slowly grow over time. Eventually, your mortgage will be completely paid off, so you’ll have a larger additional stream of money coming in on top of any other income you make.
Of course, you can also choose short-term rentals, such as Airbnbs. Airbnb rentals can be a highly lucrative way to earn money. There are cons to short-term renting, though. Long-term rental tenants typically pay more of their own expenses and utilities, but short-term renters do not, which means you’ll be expected to pay all of the bills associated with the prosperity, such as utilities and trash collection. Additionally, you must market your property, which means keeping it in good condition before, after, and during a tenant’s stay.
Flipping
If you watch television, you’ve probably already come across a reality show about house flippers that makes it look easy. There are many benefits to house flipping. You can generate money quickly if you can find ways to buy houses at a low price and sell them for much higher. Of course, flipping typically involves renovations, which can get expensive if you don’t hire the right company. Ensure you find a reputable contractor who you trust as they can get you the best field service contractors to help with your house flipping projects.
When flipping a house, there’s no guarantee you’ll make money. However, if you figure out a way to do everything right and get the house back on the market quickly, you can make tens of thousands of dollars a month.
Trusts
Real estate investment trusts (REITs) are companies that finance real estate; they trade on major stock exchanges, and investing in them can benefit investors. With trusts, you don’t own any property, so there are virtually no overhead costs or repairs involved. Instead, you can break into the real estate investment industry by becoming a REIT stockholder, which many people already do through their retirement plans.
Is Real Estate Investing Worth It?
Real estate investing has many benefits, including having a regular income that can help you pay your bills and any other mortgage. Additionally, you can get tax benefits if you turn your investment into a business by becoming a landlord.
Real estate investments are well worth it if you can afford them. You’ll need to put down a substantial amount of money for every type of real estate investment on this list. For example, if you plan to purchase a house to either rent it out, live in it, or flip it, you’ll need to save enough for a down payment. If you don’t have the money to start investing, there’s no reason to purchase a house you can’t afford, even if you can get a mortgage company to give you a loan. Remember, real estate investing is all about building wealth, not putting your financial future at risk.
If you don’t already have a house, you may choose to live in your house and let it build equity while you use it. Of course, there are pros and cons to each type of real estate investment, but if you’re willing to do the math and put in the work, you can make a significant amount of money.
Julia Olivas
Julia Olivas graduated from San Francisco State University with her B.A. in Communication Studies. She is a contributing writer at 365businesstips.com where she loves sharing her passion for digital marketing and content creation. Outside of writing, she loves cooking, reading, making art, and her pup Ruby.
