Print this page

Real Estate Investing Strategies For The Beginner

Posted On Thursday, 17 February 2022 19:52
Real Estate Investing Strategies For The Beginner

Have you been paying attention to the real estate market for the past year? 

It’s been incredibly hot for sellers in many parts of the country. 2021 was one of the hottest seller's markets in decades, fueled by low-interest rates, the move of many jobs to remote work, and lower inventory available. 

For the average home seller then, it’s been a great year to sell. But unfortunately, buyers have had to out-compete others for the same house, often paying substantially more than list prices. 

And flying under the radar in this selling and buying frenzy are the real estate investment opportunities that exist. 

Between renters wanting more space and higher-end workers paying premiums for apartment spaces in cities that are location-dependent, the desire to move has been greater when work is moved remotely. 

Additionally, lower inventory on the market pushes inflationary pricing on existing home sales through the roof. The market is ripe for investment if you have the know-how. 

Real Estate Investment Strategies For People Without A Lot Of Cash

While it may seem that getting into real estate has plenty of barriers, there is ample opportunity to get involved, even for those with minimal cash available. 

There are ways to minimize your financial risk while offering some form of potential return, from investment trusts, pooling resources, and wholesaling.  

REIT’s

REIT is an acronym that stands for real estate Investment Trust. It is a vehicle for many people to invest in single properties or multiple holdings simultaneously. 

In a REIT, people invest in a holding trust, and ownership is split evenly per share of investment. 

The benefit of participating in REITs is that you have access to more significant investment opportunities with the lower risk associated with your capital, as you provide smaller amounts to have ownership shares. 

Of course, being part of a REIT also means that you have lower overall ownership of the investment property, which significantly lowers your ROI or return-on-investment. 

Co-Buying

With housing prices skyrocketing, the average first-time homebuyer finds it challenging to purchase a home even with low-interest rates. 

An alternative to traditional home buying is two or more people pooling resources to buy a home. This is the concept known as co-buying. 

Co-buying is pooling resources between two or more parties to purchase a home, either living in or renting out as an investment opportunity. 

Increased student-loan obligations and rising living costs have made single-ownership appear out-of-reach for many people. Hence, one way around the issue is to pool resources and become partners with another person. 

This strategy has its limits, however. Banks will require more than just proof of income between parties, and if it’s a home you plan on living in, you need to be sure you can coexist with your partner (perhaps in more ways than one).  

Additionally, any refinancing or renovations will require joint approval, so knowing your business partner well and having clear lines of communication will be critical in the future. 

Wholesaling

Another form of investment opportunity is wholesaling. 

What exactly is wholesaling real estate, and is wholesaling real estate legal?

Wholesaling is the act of making a purchase agreement with a seller and then assigning the contract to an end buyer for a profit. 

Is wholesaling legal depending on whether you follow national, state, and local regulations regarding the investment, mortgages, and other laws for your specific area? If you’re a real estate professional, you must disclose that information when performing a wholesaling deal. 

The benefit of wholesaling is that you don’t need much upfront capital to purchase but need to have extensive marketing and networking capabilities to find a home to “purchase” and then sell it at a profit. 

Often, the types of properties that perform well in wholesaling are distressed properties, owners underwater in their mortgages, or otherwise unable to sell the property. 

Benefits of Wholesaling include:

  • Low upfront capital investment
  • Potential turnaround on profit
  • Quick entry to real estate Investing

 

Risks and limitations include: 

  • Lower profit margins than traditional real estate investments
  • Dependency on sellers interest in wholesaling and investment buyer connections
  • Unpredictable income

 

The American Dream has become more difficult for many people. Yet, with these investment opportunities, an investor can get their foot in the door and begin to take small steps toward the dream of homeownership. 

For the investor who wants minimal risk, these investment opportunities are good ways to grow your portfolio, albeit slower and smaller but safer in real estate investing.

Rate this item
(0 votes)

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries