Real estate investing has never been as popular as it is right now and endless opportunities. For those looking to build a passive income, start saving for retirement or launch their own business, real estate investments make it easy to build their portfolio.
No matter your real estate investing goals, getting started can be risky. From endless types of properties, and different investment strategies, the hardest part of real estate investing is getting started.
We break down some of the best ways to get started in real estate investing, and the pros and cons of each, so you can start real estate investing today.
“Real estate investing is one of the top ways to generate wealth and build passive incomes.”
Vacation and Airbnb rentals
Thanks to the rise in technology, anyone can become a landlord. If you have a spare room or even a property you can easily advertise your vacancies to tenants looking for temporary housing. Apps like Airbnb are changing the way real estate investors approach vacation and short term rentals.
Vacation rentals are a great way to maximize properties in tourist destinations and use second properties. These rentals charge more for short term stays and are perfect for turning under used properties into passive income earners. Private money lenders suggest that you make one-time large repairs to attract more tenants to your vacation and short term rentals. Some must-have features for vacation rentals would be, pristine kitchens, pools, or modernizing your space.
Airbnb rentals are also an easy and exciting way to get involved in short-term rentals. Airbnb investing can be as simple as renting out a spare room, or some investors are even dedicating full homes to this type of investment. This type of investment not only makes it easy for hosts to set preferences for their short term tenants but also fluctuate their rates depending on the seasonality of their investments. This type of investment can be ideal for high travel business hubs, seasonal vacation renters, and rates that can be easily adjusted for peak travel seasons.
Short Term rentals offer a lot of flexibility for real estate investors, which is why more investors are hopping on this opportunity.
Long Term Rentals
Long term rentals are your traditional real estate investment . It’s a classic staple for any serious investor for many reasons. The biggest reason it is so popular amongst real estate investors is because of its steady passive income, and minimal upkeep.
Steady passive income is what builds real estate investors fortunes, and is a regular in many investors portfolios. Some examples of Long term rentals are renting single-family homes, multi-family rentals, duplexes, and even commercial properties such as office spaces!
For most real estate investors, the biggest challenges of this investment are finding tenants, and updating your space. Many investors update their space to make it more appealing for tenants, and updated spaces are more attractive for higher renters and lower vacancies. Long term rentals are a classic for real estate investors due to their dependability for passive income.
House flipping is at some of the highest levels it has ever been, and is more lucrative for investors who can find the best flip. House flipping, where investors find distressed or undervalued properties, make repairs, and then sell for a profit is very prominent in the public eye.
The after repair value (ARV) is how real estate investors determine the repairs and profit margins for a flip before they purchase it. ARV is determined by comparing nearby comparable properties (comps) in similar condition, age, size, build, and style that have recently sold, and adding the value of repairs to the property price. With this formula, house flippers can find and determine ideal properties for flipping.
For house flippers, they often mix rental properties with their flips, so they can have steady passive income to fuel their various projects. House flippers use hard money loans to help finance their flips, as these loans are asset-based and use the ARV of a property to determine the loan.
For house flippers, it is important to be able to find the right properties, ideally ones that are in top markets and don’t require too many large repairs. If done correctly, house flipping can lead to large one-time payouts that can fuel many other real estate investments.
Real estate investors have many different types of properties and opportunities to pursue. Many investors combine multiple types of investments to create revenue streams and fund future investments. Many investors find these real estate investments to be great ways to generate revenue!
● Vacation And Airbnb Rentals: Short term rentals are a great way to capitalize on high traffic areas, and season business, perfect for those who want are looking for short term tenants, with minimal maintenance.
● Long Term Rentals: The classic passive income earners for real estate investors. Long term rentals can vary from single to multiple family properties and are a great way to receive a steady income for funding any investment.
● House Flipping: House flipping is all about finding the right properties, making the right repairs, and making a profit. While finding the perfect property to flip is no easy undertaking, house flipping can see large one-time profit margins for these investors.
Which investment type is your favorite?
About the Author: Catherine Way graduated from Michigan State University, She currently writes and reports for Prime Plus Mortgages – Hard Money Lenders