Everyone needs to start somewhere! No one is born successful, including the biggest names in real estate investing.
Beginner investors should be educated before jumping into this field. A plethora of questions arise in the minds of beginner investors as to how they can make a good start with their first move and keep the positive trend going.
Jeff Adams believes that beginner investors should first decide what branch of real estate investing they wish to deal in. Knowing where you want to go with real estate investing allows you to make concrete decisions.
The two major arenas you could choose from when beginning with real estate investing include:
1. Residential Real Estate
The cost of getting started with residential real estate is much lower as compared to that of commercial real estate. There are many more options within residential real estate that will bring you good money. For example, you can choose to lease the home or sell it for a higher price.
2. Commercial Real Estate
Commercial real estate brings in more profits than residential real estate. However, commercial properties cost more to own and hence this is not a very preferable option for beginners. But, once you’ve mastered real estate investing, you can opt for this arena to ensure more income with each passing month.
Also, compared to residential real estate, commercial entities occupy the said space for a longer period of time, ensuring long term profits.
Whether you choose to deal with residential real estate or you go the commercial way, there are three main tried and tested strategies which can be used; these include.
1. Buy and Hold
The buy and hold strategy involves buying real estate, renting it out and waiting for it to appreciate before selling it. As you wait for the market value to gradually increase, you can even invest in smaller real estate options so that you have other streams of income. When the market value of your property is high, you can make a good profit and then continue to invest with such a strategy.
2. Flipping
The flipping strategy involves buying property with the intention of selling it immediately. In this type of strategy, you do not hold on to the property for long, and sell it off immediately to invest in another property. When you buy property at a good discount, you can quickly sell it off to a buyer for the actual price or remodel it a bit and make a reasonable profit. Hence, flipping has become a popular strategy in the last 10 -15 years, especially with beginners.
3. Wholesaling
Wholesaling involves playing a role of a broker in the entire process. You can get into wholesaling property without actually using any of your own money. Find deals that other investors would be on the lookout for, and on bringing it to them, you can receive a commission. Wholesalers are mostly sought after by investors who rehab or flip between properties. So while they’re working on selling one of their properties, they are also searching for new property to invest in.
Eventually, all the commission you make can be helpful in allowing you to make good investments in real estate yourself.
So, which strategy will you opt for?
