Be An Expert In Starter Properties For Investment!

The last couple of years, counting from the COVID-19 Recession, haven’t been kind to investors. The market has been dragged down by lagging consumer purchasing power and confidence. Inflation, an above-average unemployment rate, and high-interest rates are also counter-productive elements to an economy already on the brink of a recession. 

Under such circumstances, spending money on investments takes a lot of courage. On the other hand, keeping your assets in cash during inflation is considered a bad idea since it devalues considerably. Suppose you still want to extend your income portfolio (even for the first time.) In that case, we recommend exploring your options with the closest thing to investments resilient to recession. 

Real estate investment is King!

Because we’re fascinated with the infinite potential of the housing market, let’s convince you about the best starter investment properties being worthy of your time and energy! Once you’re ready to hop on this thrill ride (promising outstanding future revenue,) contact professional local real estate agents! They are the undisputable experts in everything connected to the real estate market. 

As a result, they can inform you about properties in your immediate area with great investment potential! Plus, they supply all the data to facilitate your decision-making in investments.

Property investment guidelines 101

Being a newbie, you might need to accumulate the necessary knowledge and insight into the business. For this reason, the first sound thing to do is to reach out to real estate attorneys, lending institution representatives, and financial advisors. Therefore, you can eliminate the initial missteps rookies are prone to do. 

Act fast and decide which route to take in your real estate investments!

Secondly, if you’ve decided to invest in real estate, act fast! Though properties are hard assets mostly resistant to depreciation, they will require time to “flourish” and produce revenue. 

And to do so, you’ll need a strategy. You can take various routes with your investments. Some require more planning, capital, and personal input (house flipping, rentals, and Airbnb). In contrast, others need only money to buy shares and bonds (REITs and real estate crowdfunding.) Or, you can dip your toes in real estate wholesaling and act like go-between buyers and sellers.

Design an intelligent budgeting plan!

But first of all, you must decide how much money you want to invest. Why not boost your chances and start investing in house-flipping or join the rental game? For this purpose, you need a considerable starter capital or loan. You must have an excellent credit history to apply for an advantageous loan at a bank, so you’d better start improving your credit score! 

We know that financing a first home in 2023 can be a hassle. However, interest rates for investment property loans can seem even harsher as banks tax investors more for credits than first-time homebuyers. The good news is that inflation won’t increase the interest rate on your loan! 

If your budget doesn’t allow buying a second home or flip an asset, you can go for purchasing stocks, bonds, or mutual funds. Still, you must be aware of the risk factor each of these implies!

Real estate investment funds (REITs)

Investing in REITs is a fantastic springboard to start your investment portfolio! Imagine companies that own, operate, and manage many properties, like residential buildings, hospitals, shopping centers, and warehouses. These companies trade stocks publicly, which you can purchase. 

Single shares are accessible, as they can cost even less than $100, and you can buy them on many investment platforms. The gist is that you will be paid dividends per share you bought. They will pay from the revenue coming from REITs holdings.

The fantastic perk of purchasing REITs is that you don’t have to be involved actively in running the property. Secondly, shares have a historically good performance income-wise. Thirdly, you can cash in your dividends smoothly or even re-sell. 

On the downside, your revenue will be subject to taxation and real estate market risks. Since personal involvement and financial input are low, don’t expect an outstanding bonus!

Real estate crowdfunding

This type of crowdfunding means a brand-new real estate investment and is basically an upper-level to REIT. Your investment must be between $1,000 and $5,000 on online platforms like RealtyMogul. Invest in such projects whose purchasers seek financing through real estate crowdfunding portals. The platforms double-check the projects to ensure their legitimacy. 

You can choose from two forms of real estate crowdfunding: equity or debt investments. Investing in debt involves investing in a mortgage loan on a property and getting a defined share of the interest when the loan repayment is settled. Suppose you invest directly in property and acquire a percentage of ownership. In that case, you will typically earn a portion of the income or profits generated by the property. Though, cashing out or redeeming your shares is permitted after a particular time (sometimes it takes more than five years!)

So why it’s worth investing in real estate crowdfunding? For starters, you get to participate in significant projects (and you don’t put hundreds of thousands of dollars at stake.) Furthermore, you choose which projects you will undertake. However, consider that your success depends on one single asset.

House flipping

Buying an asset, giving it a facelift, and selling it for a higher return can be the next big step in your real estate investment career. By all means, flipping involves assuming a greater degree of financial risk, but the payoff can also be attractive. 

Still, we must bring several deterring aspects to your attention that often make investors question the potential of house flipping. We all know how inflation boosted real estate prices. In addition, the US market suffers from a housing shortage. Under such circumstances, the real estate market trends for 2023 aren’t too bright for investors. How do these conditions influence flipping? 

The risks you must assume when you go for house flipping

First, tracking down a reasonably-priced property will be tough. You must most likely resort to “unorthodox methods” to discover vacant, deserted, and rundown properties or assets under foreclosure. We recommend joining real estate forums and groups on social media where you can ask for such properties. Furthermore, drive around your neighborhood to spot neglected houses, money-making warehouses, and condos that conceal excellent potential!

Second, no one can be 100 percent sure about all the expenses house flipping will bring. There’s a long, seemingly endless list of fees you must be prepared to pay: building permits and materials, construction, manual labor, and working with experts in the domain (contractors, designers, attorneys, financial advisors, insurance brokers, etc.) all cost money. Don’t forget that property titles, HOA bills, and home insurance policies also cost money!

Suppose you can’t find a buyer willing to pay a sum you’d be satisfied with. In that case, you can’t sell, yet the house continues to generate additional costs. Nevertheless, in 2022, one house sold from ten was a flip in the States. And the flippers made a decent revenue. 

Final thoughts

Since inflation is in full bloom, times are more delicate for investors. Still, you can decide to invest your money intelligently in real estate. Before spending money to make money, we advise you to consult with experts in the field and establish a business plan together! If you’re a newbie in investments, focusing on lower-risk REITs is recommended. Real estate crowdfunding can be an upgrade that doesn’t require substantial investment. Plus, it offers a genuine insight into how real estate works. 

Suppose you want to go deeper into this exciting world of real estate. In that case, we advise trying house flipping (with caution!) and buying a second home that you can rent out to tenants or tourists. Either option you choose, real estate can be a highly profitable side hustle or a full-time job!

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Created on Jul 3rd 2023 11:28. Viewed 110 times.

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