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Simple Ways to Invest in Real Estate (2019 Update)

In the last few decades, real estate has become one of the most common investment methods for any age group. Even throughout the recession and downfall of the housing market in the 2000s, real estate investment has remained a popular means of preparing for a comfortable future. But if you’ve never invested in anything before, you may be intimidated by the idea of buying and selling properties. Buying a house is frequently seen as a major life milestone in our culture, so it’s easy to understand how it could be daunting.

But you don’t necessarily have to jump right in to buying and selling houses or commercial buildings. There are some very easy ways to invest in real estate that aren’t quite as overwhelming. For beginners who want simple investment options, or experienced investors who just want new ways to branch out without a lot of effort, here are a few great options:

1. Investment Groups

Real estate investment groups are a great way to learn the ropes before you strike out on your own. If you don’t want to become a landlord, or worry about the paperwork, an investment group is definitely for you. The group (including you) will agree on a specific type of property that you are all interested in, and then the company will buy or build the properties with the money that the investment group provides. The company takes care of all the day-to-day details, and you see a check show up for your part of the rental or sales revenue when due.

This is a safe way to get started with investing while you learn more about what types of properties are the best options. It also allows you to learn from more experienced investors, and to develop mentor relationships.

2. Invest through Crowdfunding

Crowdfunding is still a relatively new idea in the real estate industry, but that doesn’t mean you should avoid it. Over the last year, crowdfunding platforms have distributed more than three billion dollars of real estate investments, up from two billion the year before. Clearly, this is a growing model that investors can take advantage of.

The key benefit of crowdfunding is that an investor doesn’t have to have as large of an investment to get started. Dozens or even hundreds of investors come together with just a few thousand dollars each to invest in large commercial properties that normally would require significant chunks from fewer investors. And crowdfunding allows you to move beyond your local opportunities, and spread your investments out all over the world. Take advantage of the market anywhere, and with less risk.

3. Live-in Flip

You’ve seen the reality shows where a couple buys a home in need of some remodeling and lives in it while they flip it. They end up with a tidy sum after putting some investment dollars and a ton of elbow grease into the place. If you’re a young, single person, a young couple, or a retiree, you are in a unique position where this could actually be a very simple way for you to start investing in real estate. It’ll be easier for you to live in the homes while you remodel them, staying in temporary lodgings between investments, or maintaining a very inexpensive rental home for between investments.

While this isn’t the easiest investment method in terms of how much you have to do, it is the easiest method in terms of getting a foot through the door. Literally anyone can buy a house, learn to fix it up with a lot of YouTube videos and the advice of local experts, and then resell it for a profit. And you may discover a new love of flipping houses along the way.

These three methods offer some great ways to get started in real estate investment. Depending on how involved you want to be, and what your budget is for investment, any of these options could work perfectly for you.

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Top 10 Worst Mistakes for New Real Estate Investors to Make (2019 Update)

Real estate investing is much easier to get started in than most people are led to believe. With the rise of crowdfunding real estate opportunities, and the popularity of real estate groups and REITs, new investors don’t have to have as much capital as they may have thought, and they don’t have to know it all to get started.

But just because it can be simple doesn’t mean that there aren’t some serious mistakes that can cause a new real estate investor to totally fail. If you don’t want to risk your first major investment, and lose the capital you saved up, pay attention to these 10 things and be sure that you avoid them.

1. Not Having a Plan

You cannot fly by the seat of your pants in real estate. While you do need to be flexible, you should have a plan in place, and a goal for every investment you make.

2. Not Negotiating a Better Price

Real estate investing is all about paying the lowest price possible, and selling for the highest price possible. If you aren’t willing to negotiate lower prices, or walk away from deals that are too expensive, you won’t make money.

3. Not Doing Your Research

Researching a property and the surrounding area is essential for every investment. You cannot rely on the information provided by a real estate agent (who wants to sell!), or a marketing agency. Be sure that you know for sure that every property you invest in has plenty of selling potential.

4. Assuming Real Estate Offers Fast Profits

Real estate investing is a long game. You’ll see cash flow early on with certain types of investments, but the real return comes after years of investing. If you’re in it to get rich quick, you likely won’t find the success you’re looking for.

5. Miscalculating Estimates

This is something that just takes experience to learn, but it can be a costly mistake to make. If you aren’t sure that your estimates for a remodeling project or other expenses are correct, be sure that you have someone with experience look over them. Even if you have to pay for their knowledge, it’s cheaper than going so far over budget that you don’t make any profit.

6. Going it Alone

Real estate investment careers shouldn’t be built on your own work and abilities. The experience of those who’ve been doing it longer than you, and the enthusiasm and buying power of those who entered the investment world with you, are valuable commodities that you should take advantage of whenever you can.

7. Investing One at a Time

If you are only investing in one property at a time, you aren’t really taking advantage of what the real estate market has to offer. You’ll waste more time looking for your next deal, not growing your portfolio, and not bringing in any cash flow, if you don’t have several projects going at once.

8. Lacking Multiple Exit Strategies

If you’re planning on selling your property in exactly one way, to a specific target audience, you are setting yourself up for failure. Ideally, every investment you make should have several ways that it can be sold or rented so that you make money, or at the least have a way out from under a lemon.

9. Getting Stuck with Bad Financing

If you ended up with a high-interest mortgage, a high monthly payment, a balloon payment, or some other bad financing situation, you are in for a rough time. Not only will you likely not make a great ROI on this investment, it’s also possible that you could be stuck with these awful payments for many years.

10. Letting Your Past Mistakes Stop You from Investing Again

Finally, the worst mistake that a new investor could make is to stop investing after a few mistakes. If you had a bad experience with a contractor, or you chose a house in a bad location, it’s easy to get discouraged. But real estate investing is a fluid market that is always changing. Dust yourself off, do some more research next time, and you’ll find your way to a successful investment career.

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What to Consider Before Investing in Real Estate? (2019 Update)

There are many experts out there telling us that right now is the best time to buy real estate. Interest rates are down, real estate development is up in many areas, and banks are lending again after the economy has started to bounce back. But just because this is a good time for investing doesn’t mean it’s the right time for you specifically.

When choosing the best time to invest in real estate, you should always consider a few key factors first to be sure that your ability to invest lines up with the market’s health for the best possible investment opportunity.

1. Stability

Much like starting a romantic relationship, both you and the real estate market need to be stable for an investment to work.

For you: How stable is your income? If you invest your savings right now, do you have a back up plan in place if you lose your job tomorrow? Being forced to rush a sale to get out from under an investment so that you have the cash won’t allow you to wait for the perfect opportunity to optimize your ROI. If you aren’t sure that you’ll be able to support yourself and pay the mortgage on your new investment (or pay for remodeling or whatever other costs you’ll have) for at least the next six months, you may want to think again about investing.

For the market: Are real estate experts mostly in agreement about the health of the market? Have there been any recent changes in legislation or interest rates that haven’t settled yet? Be sure that the market is stable as well so that you don’t find yourself stuck with an upside-down investment.

2. What is Your Goal?

Before you invest in a property, be sure that you consider what your goal is for the property. While you probably have an overall goal with your investing already in mind (such as “create a retirement fund”, or “quit my job in 5 years”), each specific investment should also have its own goal. Do you want to live in this house while you finish out your 5 years with your current job? Do you want to rent this house to start making some extra cash and grow your portfolio? Don’t simply buy a property just because it’s a sound investment on paper. Consider what you’ll do with it while it’s on the market.

3. What Does the Research Say?

Every single real estate investment article you read will tell you to do your research. Knowing the property and the area is vital to making a good investment. The reason that this consideration is so often mentioned is that it’s easy to get swept away by the description written by a real estate agent. Guess what? They want to sell the property! Their descriptions are designed to draw you in and make you want to spend money.

Before you buy, consider what the research says about the value of the property, and about the future of the area. Is it a place where a person could live for a decade? Could they raise a family there? Could an elderly couple enjoy their retirement years there? Consider every possible demographic, and really picture if they could find happiness in this property and in this area.

Be Patient

Real estate investing seems like a high pressure investment. Competitors are everywhere, and interest rates are always fluctuating. It’s tempting to go with your gut. The most successful real estate investors are those who have learned patience. As you do your research, consider your stability and the market’s, and define your goal for the property, you’ll be able to trust that you’ve made a great decision. If a property is bought while you are still deliberating, consider it a dodged mistake, and move on to the next one. The great thing about real estate is that there is always another house for sale.