How You Can Invest In Real Estate for the First Time

Real estate investment seems like a rich man’s game. After all, you need money to be able to put towards construction and development projects. It can seem like an uphill battle if you don’t have the funds at your disposal. However, there are some tips and tricks that can make investing possible for beginners too. It just takes some time and dedication.

Find a Platform

Before you start practicing, make sure you have a property and casualty license if your state requires one. Next, you can move onto finding your platform. Now, the hardest part of investing in real estate is knowing what is available to you. And if you aren't careful, you can quickly get buried under tons of options and not be able to figure out where you want your money to go. However, there is an easier option for you through real estate platforms. These platforms are websites that allow you to make joint investments with other people so that you can collectively make a bigger impact. It’s very similar to crowdfunding, except you can get a return on this investment. This is a really great place to start building a portfolio even if you don't have a ton of money for investing yet.

There are a lot of other benefits to using these sites as well. One of these is the minimum investment on your part. For one, you don't have to be an experienced or accredited investor to make these deals. You just have to agree on the investment itself. Some platforms will let you invest as little as $500 on one property. And these property investments are typically short, with the average spanning between a year and thirty-six months. So you can choose to wait out that period, or you can look at and invest in a number of different projects if you want to do that instead. This will give you some diversity in that real estate portfolio as well, which comes in handy later on during your career.

Flip a Property

There are a lot of reality shows dedicated to showing you how you can flip a property and it may seem completely out of your league if you're a beginner. However, there are tips and tricks that can make it easier for you to flip a property with as little as a $5,000 investment. The biggest thing you need is a solid plan of how you're going to divide up your money to make sure that you spend as little as you have to without sacrificing for quality. This sounds a lot easier on paper which is why so many property flips hit snags and go over budget with just one more change than they were expecting. But if you're smart about it and take it one step at a time, you can flip your very own property.

A lot of the work in this kind of project is through research. Different properties will require different levels of money and time commitment. For example, you probably shouldn't start by trying to flip a three-story, 2500 square feet house. You have to start small and work your way up there when you have a larger investment pool, both with funds and available time. But you will have to figure out some information on the property you eventually choose. You have to know the information about your property and what it needs to be flipped properly. You also have to be able to figure out what the easiest and most cost-effective way to accomplish those goals are. If you don't make a solid plan and stick to it, you could crush yourself under the weight of this project.

Self Directed IRAs

You can even set up your own long-term funding to invest in real estate. This comes in the form of self directed IRA accounts, which are very similar to a traditional IRA that you would set up for retirement. However, self-directed versions allow you to make a wider range of investments with your money, including real estate properties. They’re fairly easy to set up as long as you know which companies to set them up through and it gives you a lot of potential for investing. You do still have to wait until your retirement fund is available to withdraw any earnings you make, but you can still easily buy, sell, and flip properties using these funds.

The Bottom Line

The one thing you have to keep in mind if you want to use this method, is that you have to know and understand the self-directed IRA rules that are set up for you. They're designed to keep you from making any prohibited transactions or investments with your money. If you choose not to adhere to them, you could disqualify your IRA and have to pay a lot of taxes on the investments you made. Therefore, as long as you keep those rules in mind and make sure you understand them before you invest, you’ll be able to make a lot of money for retirement.