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Everyone wants to grow their wealth over time. But with the struggling stock market in bear territory and alternative markets like cryptocurrency also struggling, this can seem like a daunting time for wealth building. Or, you can see it as an opportunity to get into what is historically one of the best investments you can make: real estate. Investing in real estate can often become such a good decision that you could end up quitting your job and doing it full time.
But how do we get to this point? We have some ideas.
Related: You want to make a living from real estate investing. When should you quit your job?
1. Educate yourself
As with any investment, you’ll do better if you know what you’re doing. So take the time to educate yourself a bit about modern real estate investing as it is a bit more involved than just buying a property and reselling it later.
The Fundamentals of Real Estate Investing Pack is a great addition to get you started on your journey. This set of five courses is taught by Symon He (instructor rating of 4.5/5), a Los Angeles-based real estate investor and business consultant. He advises private real estate investors on acquisitions and deal structuring and consults with startups. He co-founded LearnAirbnb, a boutique advice and education blog that focuses on the home-sharing economy.
In this pack, he’ll walk you through the work you need to do before you get into real estate investing. You will learn how to research properties, identify the best opportunities and structure offers to suit you. You will understand how to analyze the value and potential of residential and commercial properties and even how to form partnerships to gain more buying power. This is the kind of comprehensive education that everyone should have before getting into real estate.
2. Investigate Real Estate Investment Trusts (REITs)
Real estate investment trusts are publicly traded through your usual brokerage account or retirement account, which means they are regulated by the Securities and Exchange Commission (SEC). These are trustworthy assets that allow anyone to get into real estate with a small amount of money.
REITs are a great way to dip your toes into real estate because they offer high liquidity, allowing you to buy and sell instantly like stocks. You are not buying a property itself. Instead, you put your money into a fund that you can use to buy and manage properties so your money works on hundreds, if not thousands, of properties and real estate projects around the world. This kind of diversification is hard to find elsewhere, making REITs closer to bonds than individual stocks in terms of safety. That said, they also don’t see as much growth as many stock indices.
3. Try real estate crowdfunding
One of the coolest developments in real estate in recent years is real estate crowdfunding. Online platforms allow individuals to invest directly in real estate projects without needing money to buy an entire property.
While many real estate crowdfunding sites only accept money from accredited investors, they are becoming more and more democratized. Sites like Fundrise allow you to invest as little as $500. Typically, though, you’ll need at least $1,000 to invest in apartment buildings, office buildings, and other projects.
There is a range of investment models on these sites. Some sites pool investors’ money to buy properties directly and pay dividends through rental income. Others lend money against real estate like mREITs. In these cases, you will often invest what you want in the fund and get the same return as everyone else. Sometimes you can choose the individual loans you want to fund, giving you the possibility of a bigger return (or loss).
The ground floor is a great place to start, allowing you to invest for as little as $10, making it a virtually risk-free introduction to real estate crowdfunding.
4. Go the traditional route
There is nothing wrong with investing in traditional real estate if you have disposable income. What do we mean by that? We mean buying a property and then owning it, or renting it out as an Airbnb or a temporary home, or fixing the house and flipping it.
“Traditional” means several things these days, as innovation has swept through the real estate space. Of course, you’ll need the cash to buy property in the first place, but renting or flipping houses can be a hugely lucrative option. (Although one that also requires a lot of work.)
5. Rent a room
If you’re not ready to become a homeowner but still want to make some money with your property, consider renting a room. It’s a smart way to help pay the mortgage while giving you an introduction to homeownership.
Whether you want to invite a friend to move in with you or have the perfect basement for an individual, renting out part of your home is a great way to wade through the shallow waters of real estate investing. You don’t even have to get a lease – you can list a room on Airbnb and have temporary guests who are at least partially screened by Airbnb, so you don’t have to worry about getting locked in with a roommate mad.
Prices are subject to change.