23% of Americans think real estate is the best investment method.
It's hard to argue with the results. Real estate investing is the way to go if you're looking for a low-risk, high-reward investment that pays dividends for years.
Today's post is for those wanting to start investing in real estate. Contrary to what many beginners think, you don't need a lot of money to become a real estate investor. Keep reading and we'll help you understand how to take a small investment and find a lucrative investment property.
Traditional Real Estate Investing
Many investors have the mindset that they need to purchase an investment property outright, or at least come up with a 20% down payment. It doesn't matter if you're living in the property or renting it out, the 20% down payment isn't always necessary.
Conventional mortgage lenders let you put as little as 3% down on a home. For a $400,000 home, that means coming up with $12,000 instead of $80,000. Of course, the larger your down payment, the faster you'll be profiting from your rental, but real estate investing is more about long-term wealth generation.
Real Estate Investment Trusts
One of the best ways to invest in a real estate market without breaking the bank is to put your money in a real estate investment trust (REIT). These let you invest in real estate without the actual physical asset of a rental home or condominium.
Similar to mutual funds, REITs are companies that own commercial and/or residential properties. They pay high dividends and, if you want to grow your investment further, you can reinvest the dividends for a larger piece of the pie.
There are two main types of REIT investment - traded and non-traded. Traded REITs are publicly traded like stocks, while non-traded ones are better for long-term investing but harder to value in the short term.
Living In Your Rental Property
A third method for property investing is to rent out a portion of your home. In doing this, you're decreasing your own housing costs while raising money for larger investments in the future.
It's a great way to get started as a real estate investor. Suddenly, your mortgage payments aren't as high and you're able to pay it off sooner. This frees you up to dip your toes in other waters, like a REIT or a second mortgage for another rental property.
If you're tentative about renting out part of your home, you can also try short-term rentals. Sites like Airbnb and VRBO make it easy to find renters and you can make good money doing it.
The Role of Full-Service Property Management
These are a few ways to take a little bit of money and get started with real estate investing. Whether you keep it on a smaller scale or parlay it into a career as a landlord, you may find yourself struggling to keep up with your duties. This is where property managers come in.
A full-service property management company can help you with any and all aspects of running a rental property. From regular maintenance to tenant selection and rent collection, a company like AMG can help.
Contact us today to learn more about our services and how they can help you become a better real estate investor.