If you've been thinking about investing in real estate, you might be feeling a bit intimidated by the idea of it. Investing in the stock market or in cryptocurrency is fairly straightforward, but investing in real estate feels much bigger and like more of a commitment. However, real estate can get you larger returns faster and it doesn't have to be overly complicated.
All you need is a strong foundational knowledge of real estate investing and a team of real estate investment professionals on your side. Keep reading to learn about some ways to get started in real estate investment in 2021.
1. Rent Out a Room
Oftentimes, people think that they need to have a large sum of money to jump into real estate investing, but that's not the case. In fact, you can get started if you have a spare bedroom or mother-in-law suite at your home.
Although renting out a room isn't a great long-term investment option, it's easy and can help you save up the money to make a larger real estate investment down the line.
You can either have a long-term renter stay in the room and pay you monthly or make the room into an Airbnb. Even if the room isn't always booked, you can easily make a few thousand dollars after just one year of renting a room out. Then, you can use that money to start making bigger investments in real estate.
2. Flipping Investment Properties
Flipping properties is a great way to build wealth quickly, especially if you're someone who's handy and can complete repairs and renovations without hiring others. However, flipping properties can also be risky, especially for inexperienced investors. Not only will you need to pay all in cash, but if you overpay for a property that requires a lot more repairs than you thought, you could lose money.
It's best to hold off on flipping properties until you've learned a lot about real estate and have the financial stability to handle a loss if necessary.
3. Purchase a Short-Term/Vacation Rental Property
One of the best options for real estate investors is to purchase a property, whether it's a condo, townhouse, or single-family home, and rent it out for vacationers. For this type of investing, you can take a mortgage out and have rental rates that cover your mortgage, insurance, and property tax costs along with some extra money for repairs and property management.
Investing in a vacation home can be more fruitful than other options because if you're always booked, you can make a ton of money. However, as 2020 has shown us, vacation rentals can be hit with long periods of limited renters, which can cost you. Fortunately, with this type of investment, you're still gaining money in the long term from the property appreciating in value. So, even if there are periods where the property is empty, you'll be secure in the long run.
4. Purchase a Long-Term Rental Property
The most fruitful form of real estate investing is purchasing a single-family or multi-family property to rent out to long-term renters. You can start investing in rental properties with just a few thousand dollars and have the cost of rent cover your expenses as you build equity and the property appreciates over time.
There are always going to be people looking to rent a nice home, so you shouldn't have trouble filling vacancies, especially if you work with a local property management company. This option also requires less work from the investor and allows a person to invest in properties out-of-state if they want.
Start Investing In 2021
Whether you're looking to dip your toes into real estate investing by renting out a room, or you're ready to invest in a residential property, 2021 is the year to get started. The real estate market is stronger than ever, and it's time for you to cash in on all of the excitement.
Work with the best real estate investment team, Professional Real Estate Management & Investment Services Inc., and start growing your wealth for the future. Contact us today to learn more.