There are numerous investment options at your disposal: stocks, bonds, gold. One worthy investment option is real estate. Many aspiring real estate investors wonder how to begin their real estate investing journey without having to drop wads of cash. Fortunately, real estate investing can be done with very little cash out of pocket, depending on the route you take. Below, we’ll cover five ways you can get started in real estate investing by starting with low-risk options to higher-risk options.
1. Become a leasing agent
A leasing agent is someone who represents a seller and helps match tenants to properties for property managers and landlords. A leasing agent might be a good choice for you if you’re looking to learn more about becoming a landlord without actually becoming one. Additionally, leasing agents can maintain extremely flexible schedules, which means you can balance your full-time job with your leasing agent job to make extra income. A leasing agent job is low risk, allows you to learn, and can provide you with supplemental income.
2. Become a bird dog
A bird dog is another low-risk real estate investing option that can provide some serious returns. In short, a bird dog is typically an agent or broker who spends their time looking for properties with high investment potential. As a bird dog, you’ll learn all about the investment acquisition business, which can help you later down the line if you want to become an investor yourself.
As a bird dog, you’ll sniff out undervalued properties or look for motivated sellers and pass this deal onto a real estate investor. In exchange, you’ll receive a fee or percentage of the sale, which can be a profitable endeavor, depending on how much work you put in.
3. Do a live-in flip
Are you living in a home that you plan on moving out of? If so, you might want to consider doing a live-in flip. Your home is most likely one of the most expensive assets you own, which means you can get a lot of money selling it. In order to make the largest profit, invest in your home, and make it more appealing to buyers.
A live-in flip is where you flip your residence, which can provide some significant tax-free savings. Part of the U.S. tax code allows homeowners to pay no tax on gains up to $500,000 for couples, or $250,000 for individuals, as long as they reside in their home for 2 of the past 5 years.
The basic idea is to invest in your home, spruce it up, and then sell it for a higher price than what you initially bought it for. Some common upgrades that can increase the value of your home include:
- Replacing old floors with new wood floors
- Adding marble or granite countertops in your kitchen
- Installing a new bathor shower
- Constructing an outdoor patio space
Once you’ve upgraded your home and lived there for at least two years, you can sell it and make a tax-free profit. If you don’t mind moving from home to home, live-in flipping can become a serious endeavor. Simply buy homes that are below market value, live in it for at least two years, renovate it, and sell it.
4. Fix-and-flip houses
Fix and flip houses are similar to live-in flip houses. The one major difference is that you don’t live in your fix-and-flip house, which means it can be a little riskier because you’ll be owning two properties at once: the home you live in and the house you’re flipping.
However, flipping houses can be a profitable real estate investment option. First, you’ll need to secure financing, such as searching for hard money lenders in MN or personal loan lenders in Az, depending on where you live. Once your finances are in order, purchase a home that’s under market value, make any necessary repairs, such as creating an open-floor concept or adding on a sunroom, and put it on the market. With the help of a real estate agent, you can quickly sell your fix-and-flipped house and use the profits to continue to invest.
5. Diversify your investment portfolio
A final option can be diversifying your investment portfolio. Real estate investment trusts are another great real estate investment option. REITs own multiple income-producing properties, such as commercial real estate like hospitals, apartment complexes, and offices. Investing in one of these can help diversify your portfolio and make a profit.
There are plenty of ways you can begin investing in real estate. With these five tips, you’ll be one step closer to dipping your toes in the real estate market.