How to Invest in Real Estate 101

If you’re looking for passive income, financial freedom, or just an extra source of income, you might consider investing in real estate. Real estate investing is a great way to gain long-term wealth and diversify your portfolio. However, where do you even start?

Even though it may seem daunting at first, here are a few tips to help you get started in real estate investing.

What is Real Estate Investing?

Real estate investing is buying and managing rental properties. This can include a variety of strategies, such as purchasing single or multi-family homes, commercial properties such as offices or storage units, or even salon booth rentals and garage spaces!

Additionally, there are plenty of ways you can earn money when you invest in real estate. This can include income from your rentals, appreciation in property value, and deciding to sell any properties.

Why Invest in Real Estate?

When it comes to investing in real estate, there are plenty of benefits. Notably, the potential for long-term growth as mentioned above. While there may be market fluctuations, most investors find success in rental properties, as there are 44 million renters in the US. 

Additionally, here are some other gains to consider if you’re thinking about investing in real estate.

1. Passive income: Rental income from real estate can provide a consistent stream of passive income, which can be used to pay off debt or reinvest in other investments.
2. Inflation hedge: Real estate is an effective hedge against inflation because rents and property values tend to increase as the cost of living rises.
3. Tax benefits: Real estate investors can take advantage of tax deductions for expenses such as property taxes, mortgage interest, and maintenance and repairs.

How to Invest in Real Estate

If you’re ready to invest in real estate, here are a few tips to get you started:

1. Set your investment goals: Do you want to generate passive income or supplement your current income? Is your strategy to target residential or commercial properties? Do you want to house hack or straight out rent the property to tenants? Before you invest in real estate, get a clear understanding of your goals. 
2. Educate yourself: Before diving into investing, conduct a little research. Use sites like BiggerPockets to find a network of investors and materials. They offer books, forums, podcasts, and bootcamps you can attend to expand your knowledge. 
3. Create a strategy: Once you feel like you’ve found your footing, work out a strategy that aligns with the investment goals you developed earlier. This can include scoping out properties, markets, and financing options.
4. Find a property: After you’ve determined your strategy, start looking for properties that fit those investment goals. Zillow, Realtor.com, and Doorsteps are great sites to source potential rental homes. Additionally, working with a real estate agent is another great way to find properties.
5. Analyze the property: Before purchasing a property, make sure you analyze the potential profitability of the rental. Research other properties in the market and factor in any expenses or repairs you’ll have to make.
6. Get financing: If you’ve decided to move forward with a property, you’ll have to get financing. Typically, this includes getting a mortgage, working with a private lender, or investing your own money into the rental.
7. Finalize the deal: Next, after you’ve figured out the best way for you to finance the rental, make an offer on the property. You will need to work with the agent or seller to complete the purchase of the property.
8. Manage the rental: Once you have purchased the property, you will need to manage it to ensure it generates a return on investment (ROI). This includes collecting rent, finding & screening tenants, listing the property for rent, signing leases, and managing maintenance.

How to Manage Your Rental Property

Yes, it’s scary to purchase your first rental property, but you might be even more scared of managing it. After all, if you’ve never done it before, where do you even start!? This is where property management software comes in.

You can use property management software as a great way to show potential tenants you’ve got an efficient system in place to manage their renting experience. Also, it helps ensure you look like a professional. 

Software like RentRedi comes with web and mobile apps to help you manage your rentals. Collect rent, source applicants, e-sign leases, and manage your maintenance (whether you choose to DIY or outsource). Additionally, RentRedi comes with web and mobile apps for tenants as well. This means they can apply to your rental, pay rent, and submit repair requests—all from one app!

Conclusion

When you invest in real estate, you’re creating the potential for passive income, financial freedom, supplemental income, and long-term growth. After you’ve done your research, developed a strategy, and secured financing the next step is simple: managing your rental.

As mentioned above, RentRedi is great property management software to start off your rental management journey. To get started or learn more, sign up using the button below!