Invest In Properties Via Real Estate Crowdfunding
Crowdfunding Real Estate investing can be very passive as well. But the due diligence you should do is more involved than simply buying shares of a mutual fund or REIT.
- Crowdfunding platforms provide an online marketplace for investing in a variety of real estate opportunities.
- There are hundreds of real estate crowdfunding platforms to choose from.
- You can invest in everything from high-quality real estate loans to single-family homes via crowdfunding.
Crowdfunding sites allow individual investors entry into bigger deals that were previously available only to those with substantial amounts of money to invest. Like investing in mutual funds or REITs, many crowdfunding deals offer very affordable minimum investments. The biggest advantage crowdfunding provides is that you can invest in specific properties and exclusive deals with very little money.
While online crowdfunding platforms make investing super easy, many platforms require investors to be accredited . And for a good reason. You are responsible for doing thorough due diligence. So, you must analyze the documents provided. You also need to find and study any relevant information not provided. And don’t forget to research the crowdfunding management personnel and policies.
Online Real Estate Platforms
Online real estate platforms, also called real estate crowdfunding platforms, help connect borrowers with investors. Developers will post deals and projects that they need financing for, and investors can then finance these projects through debt or equity. This creates a mutually beneficial arrangement investors can enjoy the benefits of real estate investing without having to deal with ownership or labor. The developers can get the financing they need for projects.
Keep in mind that financing real estate deals can be just as risky and speculative as directly investing in real estate yourself. Always do your homework before you strike a deal. Investors benefit from receiving monthly or quarterly distributions, and they can choose to invest in standalone projects or a portfolio of projects. Its also a great way to diversify your real estate investments geographically. Potential downsides to using a real estate platform are that the funds can be illiquid with lockup periods, and investors have to pay platform membership fees.
Activate Your Real Estate Agent License
When you pass the exam, it’s time to submit an application and any required documents and fees, usually $200-$400, to your states real estate regulatory organization.
When your application is approved, the state will mail your real estate license certificate to you, and your name will be searchable under the licensees’ section of its website. Keep in mind that youre not allowed to work as a real estate agent before your license is issued by the states real estate authority.
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How Does Real Estate Investing Make Money
Investing in real estate is a tried and true method of making money, and you can make that money in various ways. The two main methods are value appreciation and rental income:
Value Appreciation: Throughout history, property values have increased over time. We call this increase in value appreciation. Any expert would agree that location is the number one thing to base your investment upon. Property values go up along with the perceived desirability of a neighborhood. Have you ever heard the phrase, buy the worst-looking house in the best neighborhood? There is some truth to this. Its better to buy a house you can fix up in a great neighborhood than an okay house in a bad neighborhood. You can also look into investing in an up-and-coming area.
Rental Income: Some real estate investors will rely solely on value appreciation. For example, perhaps they live in the property or invested in a vacation home. However, many real estate investors like to grow their wealth by generating rental income.
In an ideal situation, your renters would be paying for your mortgage and some profit to boot. However, be sure to factor repairs and maintenance into your budget.
Build Your Online Presence
An online presence is critical for prospective clients to find you. Consider creating your own website where you can , or build a profile on an existing real estate website.
And don’t forget to write a real estate agent bio that reflects your professional experience, education, and skills. Using a website will help you attract and engage with online leads and share your listings.
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The Blue Business Plus Credit Card From American Express
This Amex Blue Business Plus Credit Card is excellent for everyday purchases because you’ll earn 2X Membership Rewards points on business purchases up to $50,000 each year, and 1X points on purchases after that. It also offers a 0% APR introductory offer on purchases for 12 months after opening your credit card, then the APR increases to 14.74% to 22.74% . The flexibility this card offers can come in handy as you’re managing your cash flow on your projects.
Develop A Marketing Plan
After you’ve determined the direction you’d like to take your real estate business, it’s time to decide how you’re going to promote the business and gain clients.
Think about your vision, target customers, and goals for your marketing efforts. Consider which real estate marketing strategies you’ll use . With a solid marketing plan, you’ll have a clear vision of how to get the word out about your business.
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How To Start Investing In Real Estate: The Basics
Real estate can be a valuable addition to an investment portfolio. Not only is each piece of real estate wholly unique, theyre not making any more of it. Real estate is a great way to enhance your investment, no matter what type of real estate investing you pursue.
There is a huge range of options for real estate investors, whether you want to be a very hands-on investor or a completely hands-off one.
Top 10 Traits Of Successful Real Estate Investors
As a first-time real estate investor, it can be easy to begin to doubt yourself and wonder if you have what it takes to succeed. However, no success story begins with perfection. As the real estate mogul Warren Buffett says, the most important quality for an investor is temperament, not intellect. It is entirely possible to learn from experience and reinvent yourself time and again. The following describes some common traits of successful real estate investors that you can start to channel today:
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Research Your States Requirements
A national real estate license does not exist, so you must meet your states unique licensing requirements. Research your states real estate regulatory office website, which you can find by visiting the Association of Real Estate License Law Officials ‘s regulatory agency directory.
Each state has specific requirements for:
- How to achieve the next level of licensing
- Reporting criminal history
Some states have reciprocal licensing agreements with other states, which means you can get your license in one state and use it in another without having to take an additional license examination. New York, for example, has reciprocity with nine states including Arkansas, Colorado, Connecticut, Georgia, Massachusetts, Mississippi, Oklahoma, Pennsylvania, and West Virginia.
Evaluating Real Estate Education Sources
With all the aforementioned ways to learn real estate investing, where do you start? Before purchasing any properties, start simple with a few free sources: read a few real estate investing blogs, listen to a podcast or two, and/or take a webinar.
Good real estate investing education sources will point you to other valuable free resources and not just try to pitch their own premium products. They reference their sources when citing statistics and facts and will also point you to excellent real estate investing communities online because they value the power of networking and peer feedback.
Ive found that the more specific the niche, typically the better the education. So if you want to learn how to flip houses for a living, find a source specifically focused on house fix and flipping. If you want to learn rental investing, look into a source specific to long-term rentals and income investing.
Strong resources also focus heavily on how to accurately forecast your return on investment and will point out some of the most common mistakes and pitfalls that can derail your returns, and how to avoid them. Finally, good sources of real estate investing education present the risks and downsides, not just the benefits of real estate investing.
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Final Thoughts On Real Estate Investing
Real estate can be a great way to diversify your investment portfolio. It can provide strong returns over time, and tends to be uncorrelated to the stock market, which can provide some much-needed cushion when the stock market fluctuates.
While it takes some time and education to learn to speak real estate and understand the fundamentals of the market, it can be a great way to earn passive income and build your nest egg.
One thing Ive learned by being a real estate investor myself is that it requires action! Ive talked to dozens of people that all say they want to invest in real estate. But 1 year, 5 years, even 10 years later they havent done anything about it. Nows the time to get off the fence and take the next step toward becoming an actual real estate investor.
A Word Of Caution About Zillow
One of the most popular real estate websites is Zillow. Zillow offers similar search functionality as the MLS, such as narrowing down by property type, number of bedrooms and bathrooms, size of the home, lot size, and price.
Zillow also provides a proprietary Zestimate of the value of a property, but this estimate may vary widely in comparison to actual market values. For example, Zillow may provide a Zestimate of $300,000, yet the home is only able to sell for $250,000 based on market conditions and the prices of similar properties in the area.
If you went by the Zestimate instead of doing your own research that could really throw off your calculations on a deal. This could result in you not making a profit or even taking a loss. The takeaway is that its always best to do your own math and research.
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Secure A 20% Down Payment
Investment properties generally require a larger down payment than owner-occupied properties do they have more stringent approval requirements. The 3% you may have put down on the home where you currently live isn’t going to work for an investment property. You will need at least a 20% down payment, given that mortgage insurance isn’t available on rental properties. You may, however, be able to obtain the down payment through bank financing, such as a personal loan.
What To Expect From This Guide
Our beginners guide to real estate investing will help you:
- Determine which type of real estate investing is right for you
- Understand the types of funding available
- Know how to pick successful properties
- Understand the valuable role of credit cards
There are many nuances to real estate investing. It pays to do the learning up front to determine which type of real estate investing you want to get involved in. Will you focus on residential properties or commercial real estate? Are you looking to flip properties for a quick sum of cash? Or are you more focused on building an investment portfolio of rental properties that provide you a monthly income and diversification? Well discuss all these options.
Depending on the type of real estate you choose to invest in, the amount of funding youll need will vary. Well discuss how to get funding for your investments and the pros and cons of each of these sources of money.
When it comes time to invest, youll need to know how to pick your properties. Well share tips on what to look for and what to avoid.
Finally, well share how the right credit cards can help you amplify your earnings and save money on your expenses. Some credit cards can even provide short-term funding at an attractive interest rate.
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Strategies For Successful Real Estate Investing
Whatever form your real estate investment takes, certain strategies will stand you in good stead.
Be financially prepared: Real estate is a particularly expensive investment, so you need to have cash on hand for a down payment, partnership share, or to buy a property outright. You’ll also need a reserve to dip into if and when something needs fixing, which should be entirely separate from your everyday emergency fund. Before getting started, establish an emergency fund, pay off consumer debt, and automate your retirement savings.
- Get to know the local market: There’s an old saying: “The three most important factors in real estate are location, location, location.” Start by getting to know the local market. Talk to real estate agents and locals find out who lives in the area, who is moving to the area, and why and analyze the history of property prices. In short: Do your research and “focus on building relationships with people because that’s what real estate is, it’s a relationship-based business,” Dana Bull says.
Keep it simple: A simple strategy can go a long way in real estate investing. If your goal is to generate passive income, don’t be fooled into believing you need to go big to make it happen. It’s best to start small and keep your expenses low, says real estate investor Chad Carson of CoachCarson.com.
Alternative Real Estate Income
You can still make money in real estate even if you dont have the capital to purchase a property. There are several ways you can invest your money in real estate projects and receive your fair portion of the profits.
Here are some of the ways you can make money in real estate as a lender.
Real Estate Investment Trusts : In a real estate investment trust, the owner of multiple commercial properties sells shares to investors. If you buy shares, youll be entitled to dividends generated by the profits from each property. Its a great investment option if you dont have a lot of capital to invest.
Mortgage Investment Corporations: Mortgage investment corporations are similar to REITs, but they hold entire mortgages. Youll get paid interest thats generated from rental payments at each property.
Real Estate Investment Groups : Real estate investment groups are private groups of investors with their own unique structuring. These are typically suitable for only seasoned investors.
Some other ways to make money in real estate include:
Long story short: there are plenty of ways to make money in real estate!
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Invest In A Real Estate Focused Company
There are many companies that own and manage real estate without operating as a REIT. The difference is, youll have to dig to find them and they may pay a lower dividend than a REIT.
Companies that are real estate-focused can include hotels, resort operators, timeshare companies, and commercial real estate developers, for example. Make sure to conduct due diligence before you buy stock in individual companies, but this option can be a good one if you want exposure to a specific type of real estate investment and have time to research historical data, company history, and other details.
How To Invest In Commercial Real Estate: Getting Started
The question of how to invest in commercial real estate has only one answer: due diligence. Regardless of what sector or niche youre in, doing your homework and minding your due diligence is critical in ensuring your success in real estate. Besides learning the ins and outs of commercial investing, make sure you understand the commercial real estate market and how it can differ from the residential real estate market. If youre ready to embark on your first commercial endeavor, be sure to abide by the following tips:
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Real Estate Investing For Beginners
Real estate accounts for 60% of the worlds mainstream assets and a significant portion of all national, corporate and personal wealth. With that in mind, real estate investing clearly deserves consideration from any individual or business looking for asset classes in which to invest a portion of their capital. 1
But before you can make informed decisions about whether or not to invest in real estate, and which of the many types of real estate might make the most sense for you, you first need to understand real estate investing basics.
This page is designed to provide you with a broad introduction to real estate investing, beginning by answering a question that few people and even some seasoned real estate investors cannot fully answer: What is real estate?
Returns From Rental Income Received
Rent income per year: $16,800.
Expenses per year: $8,440
Profit from the renal property income: $8,360, which equates to a 29.7 percent return.
This number is misleading, because I have been very lucky with these tenants and had no out-of-pocket maintenance, except for the deductible on an insurance claim. We had a major hail storm that damaged the roof, some siding and windows, but my expense was only $500. When I figure cash flow for the future I include much higher expenses for vacancies and maintenance.
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Manage Real Estate Properties
Theres a high demand for property management companies. Many real estate investors dont have the time to manage multiple investment properties, and theyre more than willing to pay someone else to do it for them.
The monthly tasks for a property management company include:
Responding to maintenance requests
Performing any upkeep of the property that a client stipulates
Most property management companies earn 8-10% of each months rental income for a single property .