How to start investing in real estate: 4 ways to get off on the right foot

Considering investing in real estate? Discover everything you need to know about the real estate sector and real estate investments.
Cómo empezar a invertir en bienes raíces

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Have you been wanting to unchain yourself from a job that makes you unhappy for 8 hours a day? How important is a life of financial freedom to you to support yourself and your loved ones? How to start investing in real estate successfully?

If you identify with any of these questions, the real question is: Have you ever considered starting to invest in real estate?

What is real estate?

Real estate businesses are business entities that are responsible for buying, selling, managing, or investing in real estate. Real estate refers to "property, land, buildings, air rights over the land, and subterranean rights under the ground."

The reality many people face today is dire: Less than 5 percent of people who reach 65 have enough purchasing power or feel financially secure to be able to retire. If you want to prepare for a stress-free retirement, now is the time to start investing in real estate in order to achieve your financial and personal goals.

Starting to invest in real estate is not an easy task, but it will pay off if you do it right. There are currently several resources that can make the learning process simpler and more efficient. Just keep reading and then you will be ready to succeed.

Is it profitable to invest in real estate?

The answer is quick: yes.

You just need to manage your assets wisely.

If you are an entrepreneur, you will have the necessary experience and business acumen to start investing in real estate projects such as residential DV. Also, if you have the financial capital to invest, this is a great advantage to enter the real estate business.

The most common way to make a real estate investment profitable is through appreciation. Appreciation is the increase in value that an asset experiences over time. Assets can be residential property, commercial property, and even undeveloped land. Appreciation can occur for many reasons, such as increasing demand combined with decreasing supply.

Making a profit from investing in real estate is possible if you sell your asset after its value increases.

For example, you can buy this apartment in Fco del Paso and Troncoso and sell it later, when its value increases. Then, the returns on a real estate investment are made by generating income through regular payments or rent.

4 ways to start investing in real estate

1. Buy REIT

REITs help you invest in real estate without physical real estate. Typically, compared to mutual funds, they are companies that own commercial real estate, such as office buildings, business premises, apartments, and hotels. REITs tend to pay high dividends, making them a common investment in retirement. Investors who don't need or want the regular income can automatically reinvest those dividends to further grow their investment.

Are REITs a good investment? They can be, but they can also be varied and complex. Some trade a stock like a stock; others are not publicly traded. The type of REIT you buy can be a big factor in the amount of risk you take, as non-tradable REITs don't sell easily and can be difficult to value. New investors should generally stick with publicly traded REITs, which you can purchase through brokerage firms.

For that, you will need a brokerage account. If you don't already have one, opening one takes less than 15 minutes, and many businesses don't require an initial investment (although the REIT itself will likely have a minimal investment).

2. Use an online real estate investment platform

If you've heard of companies like Prosper and LendingClub, who connect borrowers with investors willing to lend them money for various personal needs, such as a wedding or home renovation, you will understand online real estate investing.

These platforms connect real estate developers with investors who want to finance projects, either through debt or equity. Investors expect to receive monthly or quarterly distributions in exchange for taking a significant amount of risk and paying a fee to the platform. Like many real estate investments, these are speculative and illiquid; you can't easily get rid of them the way you trade a stock.

The problem is that you may need money to make money.

3. Consider changing investment properties

Here's a fact: You invest in a low-priced home that needs a little love, you renovate it as cheaply as possible, and then you resell it for a profit. Called a house move, the strategy is a bit more difficult than it appears on television.

There is a higher element of risk, because much of the math behind investing requires a very precise estimate of how much repairs will cost, which is not an easy thing to do.

The suggestion: find an experienced partner. You may have capital or time to contribute, but find a contractor who is good at estimating expenses or managing the project.

The other risk of investing is that the longer you own the property, the less money you will make because you are paying a mortgage without generating income. You can reduce that risk by living in the house while you fix it. This works as long as most of the updates are cosmetic and you don't mind a little powder.

5. Rent a room

Finally, to dip your toe into real estate waters, you can rent part of your home through a site like Airbnb. It's a homebrew shortcut for those with a commitment phobia - you don't need to hire a long-term tenant, prospective tenants are at least a little short-listed by Airbnb, and the company's host guarantee provides protection against damage.

Renting a room feels much more accessible than the elegant concept of real estate investing. If you have a spare room, you can rent it.

Like all investment decisions, the best real estate investments are the ones that best serve you, the investor. Think about how much time you have, how much capital you are willing to invest, and whether you want to be the one to take care of household problems when they inevitably arise. If you don't have DIY skills, consider investing in real estate through a REIT or crowdfunding platform rather than directly in property.

Other ways to do it easily

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