If you are reading this, you are probably considering the idea of becoming a real estate investor. That’s a great choice if you want to make money with relative ease and stability. No doubt, real estate investing is one of the best ways to make money for both beginner and expert real estate investors because of the many benefits which real estate investments offer over other investment options. However, real estate investing for beginners has some twists, which you should learn before jumping into this exciting business endeavor. First and foremost, you have to learn the best real estate investment strategies for beginners. Remember, what works the best for a real estate expert does not necessarily work for a real estate novice. Thus, here we introduce you to the best real estate investment strategies for beginners in particular.
Best real estate investment strategies for beginners: Renting out a part of your primary home
If you are just about to become a real estate investor for the first time, maybe it is a good idea to not buy an investment property, just for now. A real estate investor is anyone who owns a real estate property, which means that every home owner is already a real estate investor. Thus, if you own a home, you can use it to start out your real estate investing business. You can first try renting out a part of your primary home (an extra bedroom, let’s say) to see whether you were meant to be a landlord and to deal with tenants. Rental properties are one of the best real estate investment strategies to make money in the short term (from rental income) and in the long term (from real estate appreciation), but some people were just not meant to be a landlord, manage rental properties, and work with tenants. So, if you are a beginner real estate investor, you can avoid the mess of buying an investment property, taking a mortgage loan, and renovating a rental property before renting it out by renting out a part of your primary home. This will give you a good taste of the real estate investing business in general and owning and managing rental properties in particular.
Best real estate investment strategies for beginners: Trying out Airbnb rentals
When renting out a part of your primary home as a beginner real estate investor, you can give Airbnb rentals a shot. The great thing about Airbnb rentals is that the Airbnb platform will take care of looking for and finding tenants (guests) for you (the landlord or the host) and that you will not be stuck with long-term tenants in case you figure out you don’t enjoy being a landlord. Alternatively, you can try out working with Airbnb rentals when you go on your vacation and rent out your entire primary home via Airbnb. Either way, Airbnb rentals are definitely one of the best real estate investment strategies for beginner real estate investors because of the services provided by the platform and the flexibility.
Related: Is renting out your property on Airbnb right for you?
Best real estate investment strategies for beginners: Forming real estate partnerships
As a beginner real estate investor, chances are that you know nothing – or at least close to nothing – about real estate investments. Even if you’ve done a ton of reading from various real estate investing sources, real estate investing is all about learning by doing. That is to say, reading about real estate investments is not like actually doing them. So, if you are just starting a real estate investing business, your best bet is to enter into real estate partnerships with more experienced investors or other real estate experts. While you will have to share the return on investment, you will also share the work, the burden of the investment decisions, and the risks. Overall, real estate partnerships are an excellent idea for beginner real estate investors. Their diversity is so great that you will definitely find a form that works for you and your real estate partners.
Related: How to Avoid Problems Arising from Real Estate Partnerships
Best real estate investment strategies for beginners: Taking a mortgage loan
If you decide to start out big in real estate investing and buy an investment property right away, instead of renting out a part of your primary home, it is a good idea to take a mortgage loan. For most beginner real estate investors, it will be (close to) impossible to buy an investment property without a mortgage loan. Do not worry too much about having to return the loan. If you invest smartly, the rental income from your rental properties will be enough to cover the mortgage payments and provide you with positive cash flow from day one.
Best real estate investment strategies for beginners: Hiring a real estate agent
If you decide to buy an investment property as a beginner real estate investor, especially if you invest on your own and not with real estate partners, it is best to hire a real estate agent to help you buy the best investment property. Make sure to choose a real estate agent who specializes in investment properties rather than homes. There are important differences between the two types of real estate properties, and a good real estate agent will be able to help you out. Although hiring such a real estate professional comes at a price, it will be worth it as a good investment property in a prime location will attract good tenants, and the rental income will cover all one-time and recurrent expenses.
A final tip related to the best real estate investment strategies for beginner real estate investors is to buy an investment property calculator. If you are looking for the best one, then go for Mashvisor’s investment property calculator. Gathering traditional and predictive analytics from real estate comps, Mashvisor’s investment property calculator will provide you with key numbers such as rental income, cash on cash return, cap rate, and others, divided by traditional rentals and Airbnb rentals, for thousands of available investment properties across the US.
Related: An Investment Property Calculator Is a Must. Read Here Why
When starting your journey in the exciting world of real estate investing, keep in mind these best real estate investment strategies for beginner real estate investors. After all, these are what the real estate experts recommend for novices like you. If you decide to buy an investment property right away or down the road, check out Mashvisor’s property search engine and investment property calculator, the best friends of any real estate investor, whether beginner or expert.