Whether you're looking to diversify your investments or are just aren’t sure if real estate investing is right for you, this article will be extremely valuable for you!
You might think real estate investing requires a lot of money up front, or requires a lot of work ongoing. This is definitely not the case any more!
And while some of that is true, there are new options this year that can make real estate a potential investment for you.
While real estate investing certainly isn’t for everyone, it can be very lucrative. Many people have made millions investing in real estate.
If you’re wanting to expand your investment horizons, here are 8 different ways to invest in real estate in 2020 & 2021!
Also, I have a special gift for you at the end of the article you'll want to take advantage of!
Wholesaling has been around for a long time, but it has really taken off in the past 5 years. Why is it becoming to popular? Well, the barrier to entry is extremely low as you can essentially wholesale with very little or no money!
To keep it somewhat short, wholesaling is basically when you find a homeowner looking to sell their property and find a buyer who is usually willing to pay cash. You’re basically the middle man that is linking those two together.
These homeowners are usually distressed for one reason or another, including late on taxes, being foreclosed, a divorce or death in the family, etc.
Whatever the reason may be, they want to sell their home and usually need to sell it fast. This, along with not wanting to pay high realtor fees is the reason that wholesalers are able to successfully come to the rescue.
Since these homeowners need to sell fast, they are often willing to sell at a steep discount and this makes for an incredible opportunity for cash buyers.
For example, John lost his job and was unable to make his mortgage payments. Now the bank is going to foreclose on his house in 3 weeks so John wants to sell so he can pay off his mortgage and not take the hit on his credit.
He doesn’t have time to list it on the market or the money to work with an agent. He’s willing to sell his $200,000 home for $130,000 if the buyer can pay cash and close fast.
You sign a purchase agreement for $130,000 with John with the rights to assign the contract to a cash buyer.
You then find a cash buyer to assign the contract and buy the property for $150,000. They both meet the day of closing to sign any final paper work and you walk away with a $20,000 assignment fee.
There’re many other details I didn’t cover, but will be coming out with a free course soon that should be extremely helpful!
2. Invest in Large Real Estate Deals
You’re able to buy into larger real estate deals with very little money. This can be either commercial or residential and your equity will depend on how much you invest.
There are two great things about investing in a larger real estate deal online:
Low minimums – depending on the platform you use, you can invest as little as $500 and be an owner in a property.
You don’t have to be an accredited investor – in the past, to participate in these types of investments, you had to be an accredited investor, but that rule has gone away for certain investment types
As such, if you’re looking to diversify your investments, but don’t have a lot of money to do it with, this could be a lucrative way to start.
Here are two platforms for investing in real estate:
Fundrise – Fundrise is a real estate investment trust (REIT) that allows you to invest in a basket of real properties. You may have heard of these guys as I’ve seen ads on TV. As such, you get a little diversification on your real estate investment. Plus, you can get started for just $500. This may diversify your portfolio, but don’t expect to get rich off of a $500 investment.
RealtyMogul – RealtyMogul offers investors a variety of properties to choose from, including residential, mixed-use, commercial and retail. Investors aren’t charged fees, instead placing that burden on the property holders. Investors can expect to see returns on their money in as little as one month.
3. Buy A Rental Property
Purchasing a house or multi-unit property and renting them out is a great way to produce extra monthly cash flow. You’ll also build equity in the property over the years (WIN-WIN)!
To do this, you will likely need decent credit and will need money for a down payment. Whether you purchase a house or multi-unit property, you’ll want to understand what you’ll be able to rent it for vs. what your monthly mortgage payment and taxes are.
I’d recommend a 30 year mortgage with fixed interest rates. This will give you stable and lower monthly payments that you should be able to cash-flow. There are several ways to do this – from buying in an area with high rents, to putting a lot of money down so that your mortgage payment is low.
You can find properties on public sites such as Zillow or even through Facebook. Every once in a while, you can find a great deal on Craigslist as well!
There are two downsides to owning a rental property:
1). You’ll need some money upfront unlike some of the other options in this article.
2). You are now a landlord and could have problem tenants unless you decide to hire a property manager. It’s essential that you find good tenants who will pay you on time and take care of the property.
Rental properties can be extremely lucrative once you’ve scaled a purchased a few. The best part about this is that when you’ve scaled to the point when you can hire a property manager, all of your monthly cash-flow will essentially be a passive income stream!
Flipping homes can be a bit risky, but extremely rewarding. Flipping a house is the sum of purchasing homes under market value, fixing them up, and then selling for a profit.
With property values at high levels, it could be a great time to get into flipping. If you’re a cash buyer, you could even sync up with a wholesaler who can find you a discounted property.
To be a successful flipper, you need to hunt down those bargain homes – the less work you have to do the better. The ideal flip home would be one that only needs minor cosmetic repairs.
You could then make the home look more aesthetically appealing and sell for profit. Things like painting or replacing the carpet. You want to avoid structural repairs if possible because of the higher costs and often delays in manual labor.
Flipping can be a risky game to get into because if you’re not able to sell for what you expected, you’ve wasted a lot of time and potentially money. You take a big chance when flipping homes, which is why you have to pay special attention to the location, needs, and price.
However, if you have the knack for flipping houses, you could find this to be one of the best investments you’ve ever made.
I underline location because through my real estate experiences, this is such a major factor. If you’re in a good location, the property values will rise faster and you shouldn’t have any issues selling the home.
Even nice homes in bad neighborhoods could struggle to sell so please be wary of the location you’re investing in!
5. Buying A Property Subject-To
Alright so out of all 8 on the list, this is the one you've probably never heard of or know nothing about. That's okay because most people are in that boat. This is what makes buying a property subject-to so AWESOME!
Subject-To typically means you're buying a property Subject-To the existing mortgage. It means the seller is not paying off the existing mortgage and the buyer is taking over the payments. The unpaid balance of the existing mortgage is then calculated as part of the buyer's purchase price.
Subject-To usually relates to the mortgage, but you can really do a Subject-To deal on anything. You could buy a property Subject-To the air conditioner and so on. Anyways, back to buying a property Subject-To the mortgage.
The seller agrees to deed the property to you, but keep the mortgage loan in their name. So, you own the property, but have the loan in the sellers name still.
How awesome is that? Okay, I can already hear you through my screen asking, "why would the seller ever agree to this?"
Two main reasons are time and debt relief. They can literally hand you over the deed tomorrow and you can start making payments immediately.
One major benefit to the seller is that all payments go on their credit reports so it can help them build or repair credit.
One major risk is that the bank could call the loan due since most mortgages do not allow for transfer of title without paying off the mortgage (Due on Sale Clause).
But, this almost never happens since the bank is happy because they are getting paid their principle and interest payments (it's always about the money).
I have never spoken to any other investors or bankers who have heard of the Due on Sale Clause being enforced because of a Subject-To deal that is current on monthly payments, but this is definitely something to be aware of.
6. Rent Out A Room In Your Home
If you aren’t sold on the thought of purchasing a home to rent out, you could first test the waters by renting a portion of your house. You have a couple of options to do this.
First, you could rent a spare room in your home or you could rent the basement. If you’re yet to purchase your first home and like this idea, you could even do the following below.
This brings me to one of my favorite sayings in the real estate industry…house hacking! Everyone and their mother should consider house hacking as a way to dip your toes into real estate.
This is when you purchase a property (typically multi-unit such as a duplex) and rent out the other unit you’re not living in. You can essentially live for FREE and start saving up for your next investment property!
The advantages to renting a portion of your house is that you get to watch your tenant closely. It’s less likely that a tenant will try to stiff you for the rent payment when you’re in the same household.
Renting a portion of your house also gives you the ability to get a feel for what it’s like to be a landlord without making such a huge monetary investment. If you’re worried about the large down payment, look into an FHA loan!
7. Help Homeowners Rent Out Their House With Airbnb
This is a very unique way to get into the real estate game, but one that could be extremely advantageous.
In short, you basically find homeowners looking to rent or sell their home and help them rent it out using Airbnb.
Typically, these homeowners are struggling to find buyers or tenants and you provide a service to fill this vacancy. You inform them that you work with Airbnb and can find them tenants to make them 50% more in monthly revenue.
So, when you’re making your pitch to them, you’ll let them know that instead of renting their property out for $1,000 per month (or sitting vacant like it is), you can make them $1,500 and will manage the Airbnb listings as well as the home maintenance.
They literally do nothing and make 50% more money, while building equity in the home.
There are some risks to this with having numerous tenants in and out so you want to make sure you’re protected with an attorney-reviewed contract.
You’ll have to be persistent with homeowners as well because many won’t like the idea of this concept as they will be unfamiliar and let’s face it….we say NO to things we don’t understand.
8. Real Estate Investment Trusts (REIT)
If you think real estate is a great investment but don’t want to get quite so hands on, you could take your real estate investing to the stock market.
Don't forget to read 8 Dumb Investing Mistakes, but make sure you finish this article first and get your special offer below!
Real Estate Investment Trusts (REIT) are great ways for you to invest in real estate without being actively involved. An REIT is a fund that is setup to invest in mortgage instruments, bonds, and stocks in the real estate niche.
There are a few different types of REITS; equity, mortgages, and hybrid. An equity REIT invests in properties, a mortgage REIT invests in mortgages, and a hybrid is the mixture of the two.
All three typically offer high yields – basically you get paid back from the interest others are paying on their mortgages.
If you’re strapped for time, investing in REITs is probably the way to go.
Some of the more popular REITs include American Capital Agency (NASDAQ: AGNC), Annaly (NYSE: NLY), Realty Income (NYSE: O).
Make sure to read the article below before investing in the stock market!
What Do You Think?
These days you can invest in just about anything and you should do what feels right for you. Personally, I love real estate, but I know not everyone else does.
BUT, one thing I know you'll love is a FREE STOCK valued up to $1,600!