If you're wondering how to create wealth investing in real estate, you're not alone. In today's financial world, more investors are looking for ways to build wealth through non-traditional methods. However, most real estate investors get stuck finding an agent, buying a house, and getting a traditional loan to pay for it. Plus, new investors often feel like they have to be a billionaire just to get started—but that's not the case!
With some creativity and resourcefulness, it's possible for those with limited funds or credit to start making extra income through real estate. An Eastern Massachusetts property management company can be a valuable resource in putting these creative ideas into practice and handling the day-to-day tasks if you choose to invest in a rental property.
If this sounds like a good way for you to get into passive real estate investing, keep reading!
In the past, real estate investors had only a couple of roads to take: residential real estate or commercial real estate. When financing these avenues, investors turned to traditional forms of financing, like banks or a group of investors, to buy and pay for the property.
Today, creative investing and financing options lower the bar for many investors who want to buy and become successful property owners.
It used to be that the only way for a real estate investor to pay for a new property was by getting a loan from a lender. This is one reason why many people have been wary about investing in real estate due to the high risk involved and low return on investment (ROI).
However, if a loan isn't the best option, many investors take advantage of creative financing options like seller financing, where they can buy properties using other people's money instead of their own. Owner-financed houses allow investors to pay the seller to get into the property. In many cases, the loan transfers to a financial institution later.
Crowdfunding takes place when a group of people pools their money together to finance an investment project. For example, real estate investors often use crowdfunding to purchase rental properties. The group of investors then splits the returns according to the crowdfunded arrangement. This eliminates all but the largest barriers to investing in real estate, making it possible for anyone with some extra cash lying around to own a property.
Rent-to-own properties are a great way to find an investment property. With a rent-to-own property, a homeowner finds a renter willing to buy the house a few years down the road, often applying part of the monthly rental payment toward the home's ownership. These types of deals allow you to use leverage without putting a lot of your own money on the line ahead of time.
Wouldn't you like to buy a house, live in one unit, and rent out the others? There are many advantages to this newer type of arrangement called "house-hacking." With this approach, renters pay the mortgage on your residence and your investment through the rent you collect from tenants living in a part of the home.
Wholesaling is the art of finding real estate deals at a significant discount, putting them under contract by signing a purchase agreement with the seller, then selling the property to another investor at a discount. A wholesaler operates like an agent but without any of the middle man fees for working with a real estate agent. It can be a great way to make money from real estate without operating rental properties!
One popular form of passive real estate investing is a REIT. A REIT, or real estate investment trust, is a company that owns and operates real estate properties, providing investors with access to income from investment properties without the hassle of purchasing a property. Investors receive dividends paid out by the REIT and never have to worry about hands-on work to buy, sell, or manage properties.
In addition to the creative investing options above, motivated sellers can help investors build a real estate portfolio. These sellers are motivated to sell quickly for a variety of reasons, such as needing to move quickly or avoid foreclosure. When you market to motivated sellers, you can get access to incredible deals on properties before anyone else knows about them.
A creative real estate investor needs a premier marketing strategy to reach the right people for more opportunities. If you're trying to decide how to start real estate investing, we're here to help! Before venturing out on your own, it can help you build more success to work with a trusted property management professional who can help find a property, market it, and perform the daily tasks involved in rental property management.
CHARLESGATE Property Management has experience helping Eastern Massachusetts real estate investors build their portfolios. Reach out to learn more about our concierge approach to property management services!
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