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2018-05-30 11:13:44
How to Start Investing in Real Estate

Purchasing real estate investment property is one of the ways you can start investing in real estate, but it’s not the only way. Let’s take a look at how you can start investing in real estate creatively:

REITs: Real estate investments are part of your overall investment portfolio. As with any type of investing, diversification is usually a good idea. Real estate investment trusts (REITs), are a great way to invest in real estate without being tied to an entire piece of physical real estate. Often compared to mutual funds, REITs are companies that own commercial real estate like retail spaces, offices, apartments, and hotels.
Investor Tip: In order to invest in REITs, you’ll need to open a brokerage account. Don’t worry--this is an easy process, and many companies require no initial investment. As you begin investing in REITs, it may be best to stick with a publicly-traded REIT to mitigate risk, as their non-traded counterparts may be hard to value and aren’t always easily sold.

Online Real Estate Platform: Did you know that there are online companies that connect borrowers with investors who are willing to lend them money for various personal needs (think home renovation, wedding, etc.)? There are, and there are also companies who specialize in connecting real estate developers with real estate investors. Prosper and LendingClub are two such online platforms. Investors finance specific real estate projects, either through debt or equity and in return, they hope to receive quarterly distributions in exchange for their risk tolerance and fee payment to the online platform. The catch? Many of these platforms are only open to accredited investors who have been qualified with income and net worth minimums.
Investor Tip: If you aren’t able to meet the accreditation standards, investigate similar companies like RealtyMogul and Fundrise who have more relaxed entrance requirements. Also, like many real estate investments, these projects are speculative, often making them non-liquid, so be sure that you’re comfortable with the level of risk.

Invest in Rental Properties: An oldie but a goodie! If you’re considering renting a home, take a look at what it would take to purchase a home or condo. In theory, let’s say you bought a condo. If the floor plan and location are right, you may be able to rent out rooms to help pay for the mortgage and build your equity. Essentially, you’re occupying your own investment property! BiggerPockets coined this as “house hacking,” and it allows investors to purchase a property with up to four units while still using a residential loan (easier qualification process and less expensive than most alternatives).
Investor Tip: Find an investment property that has combined expenses of less than the amount you can charge in rent. If you’re not handy, you also need to plan for the expense of hiring a property manager.

If you’re thinking of investing in real estate in one way or another, kudos to you -- it is one of the most effective ways to build long-term wealth. My seasoned expertise of the Central Texas real estate market delivers a distinct advantage to my clients. If I can assist your journey in any way, please know that I’m always here for you.

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