Investing in Real Estate: The Guide for Beginners

April 22, 2022 3 min read

Investing in Real Estate: The Guide for Beginners

Investing in Real Estate: The Guide for Beginners

Count five ways to make money in today's world, and investing in real estate shows up second on the list. This is because real estate hasn't exactly been what it used to be – it has gone through a major change. People don't have to check property listings in newspapers or neighborhood magazines anymore. 

For someone planning to invest in real estate, the ultimate aim is to make money many years from now, as the property appreciates in value. It is one of the medium-risk investments but often comes with different costs such as utilities, insurance, and maintenance. That is why it is always important to do a little bit of assignment before investing. 

In all truth: investing in real estate is a seamless process. If there were capital, most people would go for it. Unfortunately, it isn't as easy as most people think it is. 

First, different factors determine whether a real estate investment is worth it or not. Another is that there are different ways to make money from investing in properties. 

How Do You Make Money from Real Estate Investment? 

If you want to make money from real estate, you may have to do any of the following: 

  • Wait Till The Property Appreciates

 One of the money-making strategies of real estate is property appreciation. Here, you invest in a property and wait until it rises in value, following the trends in the real estate market. It can be tricky to make money from real estate using this method because you can't be so sure when the property will increase in value. More so, you are not getting regular cash flow. 

  • Set Up Your Property

The other way to earn good money from real estate is to set up a property. That means you take full ownership of the property, i.e., a building, and make good from rental (apartments, facilities, storage units, etc.). You can get people to live in this property as tenants. And depending on your agreement with your tenants, you can collect money monthly or annually. With this method, you have a stream of income. 

  • Become an Agent or Broker

You also don't necessarily have to own a property to become a real estate investor. You might just become a broker or agent. These people are significant in real estate because they are responsible for connecting investors to properties. As a real estate agent or broker, you can make money by receiving commissions as you buy or sell a client's property. So far, many people have made a career out of this work. 

  • Providing Ancillary Services

The last way to make money from real estate is by providing ancillary services. Many apartment buildings might need certain equipment or facilities, such as vending machines, ATM machines, etc. You can provide such services to them and make your money. Even if you aren't making money from the property owners, you have an audience using your services and paying for them. 

What Do You Need to Know Before You Buy a Property? 

Regarding real estate investing for beginners, there are some things to be mindful of. You shouldn't dabble in this business when you are unsure about it. 

Some of the things you are advised to do and that you need to know are: 

  • If you cannot afford a property, you can take a mortgage out against it. This debt method has allowed several real estate investors to get properties of their choice. However, you have to be careful and watch the market closely to avoid bankruptcy. 
  • Hire a real estate attorney's services to mitigate risks and protect yourself. You are enlightened on what property to choose and whatnot by consulting an attorney. You can also be protected against lawsuits. 
  • Active and Passive Real Estate Investing – the former involves getting your hands into buying properties, while the latter involves buying into a real estate investment trust. 

Advantages & Disadvantages of Investing in Real Estate

Real estate investing is such an incredible experience with several advantages. However, that isn't to say it doesn't have its disadvantages. 

Real estate is a low-risk and low volatile investment compared to the stock market. They are also great streams of income with a long-term return. Unfortunately, they often require a lot of money, have poor liquidity, and are not easy to predict. You may also have to deal with utilities, tenants, and building maintenance every now and then. 

Notwithstanding, real estate investment will always remain a great money-making approach. The only thing is that you should take some time to review the properties available before investing in them.