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Beginner's Guide to Real Estate Investing

By Jamie Richardson | June 25, 2023

After spending some time thinking and going over the other options, you've settled on investing. However, you're not looking to invest in something such as the stock market or treasury bonds. You've found an even better option: real estate. Real estate investing has become incredibly popular over the past few years, and for pretty good reasons. 

Real estate is even considered by established professionals to be the safest and most profitable form of investment to date. Furthermore, it's also easy to get into. However, investing isn't easy regardless of what it's for and you must be diligent with it. In this guide, we'll be covering the basics of real estate investing, what types there are and how you can ultimately profit from it.

Types of Real Estate Investments

First, let's cover the various ways you can get into real estate. Many don't realize it at first, but even homeownership is a type of investment. Those who have a house they've been paying off for years accumulate equity, which can be used as a part of your portfolio. To give you an example of what having equity can do, look at home equity lines of credit (HELOCs). A HELOC is a special type of loan exclusive to homeowners, which functions quite similarly to a personal loan.

You can use the money you obtain towards anything ranging from getting a high-quality remodel to taking that vacation you've always wanted. In fact, you can even use a HELOC to pay for college. It's a great way to help your college-bound children get the education they need with very little issues. But that's just scratching the surface of how profitable real estate can be. Here's a quick list of the types of real estate investments you can consider:

  • Owning an apartment complex
  • Renting out unused space, like a vacation house
  • House flipping
  • Real estate shares

We'll go into more detail about these in a little bit, but these are among the best options at your disposal. Regardless of your choice, it's critical you do your research and learn all you can first. It'll make this process far easier than it is.

House Flipping

House flipping can generate a lot of money, but it's not exactly the most beginner-friendly option either. As the time-old saying goes, you must spend money to make money. But with house flipping, that may not always be the case. It works like this: you browse the real estate market for a cheap property, you invest in its repair and renovations and the place it back on the market for a higher price. House flipping will have you looking at old, run-down, and even abandoned buildings, which is why they're so affordable. What's not so affordable is the cost of turning these buildings back into a habitable state. There's a cheaper alternative called micro flipping.

Real Estate Shares

Whenever you hear the term shares, what comes to mind? The stock market is commonly known for offering various shares that people can buy and generate revenue. How the revenue is made that you own small fractions of a company, like Apple and Google. Real estate shares function the same way, except instead of a company, you're investing in a property. 

However, instead of owning the entire property, you only own a small fraction of it. Anyone who purchases or rents in the section you own, you'll earn a commission from. Real estate shares are affordable, but in the case you're unable to finance it, there's another option called fractional real estate shares. Fractional real estate shares allow investors to put as little as $5 to $10 into a property along with a handful of others, like mutual funds.

Choose a Suitable Location

Now that you have learned a few real estate investing tips and know the types, let's get into how you can maximize your chances of making a profit. The first rule of thumb in real estate is the location. If a location isn't the best or it's not considered safe, people won't be inclined to move there, and this goes for every type of real estate investment.

New Construction vs. Existing Property

Whether you're purchasing shares or buying the property itself, you need to choose between a new construction and a pre-existing building. Both options have their ups and downs, so be sure to consider which will work best for you in the long run.

Jamie is a 5-year freelance writer who enjoys real estate. He is currently a Realty Biz News Contributor.
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