Real Estate Investment Strategies for the New Investor

Jeremy BiberdorfBy: Jeremy Biberdorf

September 25, 2017September 25, 2017

Real Estate Investment Strategies for the New Investor

Investing in real estate can be an effective way to make money both actively and passively. While some may believe that they don’t have the time or money to get involved in real estate investing, it may be easier than they think.

Let’s go over a few tips that can help beginners be successful buying or selling homes or other properties.

Put Money In Real Estate Investment Trusts

Investing in a real estate investment trust (REIT) gives you exposure to the real estate sector without buying an actual property. A REIT generally invests in a certain type of property or in certain types of loans made for those properties.

For instance, one REIT may focus on buying mortgages while another REIT may focus on buying commercial buildings. It may be possible to invest in a REIT with as little as $1,000 or less.

Act as a Hard Money Lender

Hard money lenders provide money to those looking to flip residential real estate. In most cases, you will get your money back plus interest in about 90 days. Interest is generally charged on a daily compounding basis, and the loan is secured by the home itself.

It is possible for lenders to achieve the equivalent of a 12 percent annual return with one 90-day loan. Annualized returns may be higher for those who make multiple loans per year. If desired, you could offer online loans to expand your base of clients.

Buy a Duplex

One of the easiest ways to become a real estate investor is to buy a duplex. While you live in one portion of the house, a tenant will occupy the unused half. First-time buyers may be especially interested in buying duplexes because renting out half of their home may reduce their mortgage payment.

Alternatively, the owner of a duplex could use the rent money to make extra payments and build equity in the home faster.

Focus on Rental Properties

New investors who are interested in buying properties should look for those that they can rent. For instance, it may be a good idea to buy a home that has a tenant in it or an apartment complex. This may be ideal because monthly rent checks provide a steady stream of revenue to cover maintenance and other costs. Over time, that money can be used as an income stream or as free cash to buy other properties with.

Go In With a Partner

When you are first starting out, it may not be a bad idea to have a partner to help finance your project. If you are looking to flip a home, your partner may buy the house or cover your mortgage payment until the house sells. When it does, that person will then be repaid plus given a portion of the profits as a return on capital.

Having a financial backer who isn’t a hard money lender may also be beneficial because this person may offer lower rates. He or she may be more lenient than a bank when it comes to providing hundreds of thousands of dollars to someone who may not have the collateral or assets to repay the loan.

New real estate investors have plenty of options to earn a return on their capital. Whether you have $1,000 or $100,000 to invest, there are likely ways to grow your money and gain the flexibility needed to take on larger and more profitable projects in the future.

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Jeremy Biberdorf
Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He's a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.

1 thought on “Real Estate Investment Strategies for the New Investor”

  1. Great article! Being a new investor myself having a partner really moved things along for us and allowed us to purchase our first property on the 20th of April. He also provides experience because he has been investing for 20 years. I provide all the leg work and he provides the cash!

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