4 strategies to build your money machine one investment at a time
What is financial freedom? It’s the ultimate goal. It means you are able to stop trading your time for money at your 9-to-5 job. You can break the cycle and earn money while you’re out doing things you really enjoy. But you must learn how to invest in order to get there.
Many people are intimidated by investing and by the financial markets. But as the saying goes, you can’t win if you don’t play. The first step to financial freedom is simply getting your foot in the door. Learning how to get started in real estate investing will set you on the right path. Should you choose a different route in the real estate industry there are a few possibilities you may choose from aside from investing such as building your own brokerage.
There are options for every level of expertise and nearly any starting budget. As your real estate portfolio – and your returns – grow, you can level up your investments. You’ll soon have a money machine generating cash for you – that’s true financial freedom.
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How much money do you need to start real estate investing?
The truth is that you don’t need to be a millionaire to get started investing in real estate. There are several types of investing that allow you to get in the game with between $500 and $5,000. If you’ve got more than that, you’ll have even more options. But if money is on your mind as you determine how to get started in real estate investing, don’t let it hold you back.
How to get started in real estate investing
You don’t need a lot of money to make your first real estate investment, and you don’t need a lot of experience, either. Here are four options for getting started in real estate investing.
1. Real estate investment trusts (REITs)
REITs are the cheapest option for those wondering how to get started in commercial real estate investing without much cash. REITs allow individuals to buy shares in real estate portfolios that are traded on the stock exchange. In this type of investing, the REIT buys real estate and rents it out. It distributes that income to its shareholders. They’re low-risk and very liquid (meaning they can be converted into cash easily) – and you can typically get started investing in a REIT for just $500 to $5,000. While they are very dependable – and look great in an investment portfolio – you won’t get much capital appreciation. The bottom line: REITs are good for beginners and those who need to diversify their investments.
2. Real estate investment groups (REIGs)
REIGs buy out a larger property, like an office building or apartment complex, and then sell units to investors. The REIG is responsible for taking care of the property and collecting income, making this an attractive option for investors who don’t want full responsibility. They can invest in any type of property, from commercial to residential, and can earn income from mortgage lending and property management fees in addition to charging rent. At around $5,000 to $50,000 to get started, they’re a relatively low-cost way to get into real estate investing, and provide a stable portfolio piece with a consistent monthly return.
3. Buying a property
Want to go all in? If the question of “How much money do you need to start real estate investing?” rarely crosses your mind, you probably have the capital needed to become a landlord. The amount of money you’ll need to get started will vary depending on your market, but you should expect to have at least a 20% down payment on the property – and don’t forget about closing costs and renovation costs. Ideally, you will charge your tenant enough rent to cover maintenance and taxes, in addition to your mortgage payments. Many landlords also choose to hire a property management company to avoid dealing with tenants directly. This type of real estate investing is high-risk, but your monthly returns will most likely be higher, especially if you can build your portfolio to include multiple, diversified properties.
4. House flipping
Officially called “real estate trading” but better known as “house flipping,” this type of real estate investment is for pros only. You’ll need experience with real estate valuation and marketing, plus the ability to make repairs at a cheap rate – either doing them yourself or by having connections in the construction industry. However, the return on investment will be quick and can be very high, making it an attractive option for risk-takers with market knowledge.
Resources for getting started in real estate investing
Finding a mentor is the best thing you can do for your real estate career. Warren Buffett, the world’s most famous billionaire investor, found a mentor in Benjamin Graham, who literally wrote the book on investing in the stock market. A mentor can help you make a plan and stick to it, give you someone to look up to and guide you past common pitfalls of getting started in real estate investing. Don’t know anyone? You can easily find a mentor online or even pay for real estate coaching.
Great mentors are great teachers and great inspirations, and you don’t have to meet in person to benefit. A mentor can be someone whose writings or seminars you admire, or someone you follow on social media. Tony Robbins’ Business Coaching has helped thousands of entrepreneurs get back on track using certified coaches and proven methods. Or experience Business Mastery with other investors just like you and learn hands-on strategies from Tony himself..