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Real Estate is a wonderful investment, though, it can be intimidating to get into your first real estate purchase as you often need either 20% down to buy a rental property. This can be a good amount of money, especially if you are trying to find a property which will net you a stable income. However, there are a few ways in which you can get into real estate investment for around $10,000. This chapter will highlight a couple of those strategies.
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Small multi-family units can be a great way to gain rental income early. You can take conventional loans or an FHA loan to get one of these properties. FHA loans allow people to get up to a four residency unit provided that you own and live in one of the properties. FHA loans have a maximum amount which you can take for the loan, which is dependent on the state in which you live. The advantage of getting a four-plex early is the ability to rent out the other three units. If you are working and getting rental income, one could pay off the mortgage quickly and it gives you a great pool of resources to help you start to save for your next property. The other advantage of having multiple renters on one property is the ability to have some stability to make sure your mortgage can be paid every month, in case you did not want to have a job besides real estate investing.
See also: The Expenses New Real Estate Investors Forget to Plan For
Another option for real estate investing is to find the worst property in a nice area of town. This helps especially if you are good at doing home repairs. The benefit is an ability to get a decent sized property for a small investment. However, the danger in doing this approach is if you run into a repair which costs tens of thousands of dollars. These repairs often create a loss of rent because people cannot live on the property while some of these major repairs are being performed.
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See also: Property Management: A Beginner’s Guide
The final tip for this chapter is to look at areas where there are major attractions nearby. Many people want to go to major amusement parks or sporting arenas but most people do not want to live near those venues because of the great influx of people going back and forth. However, you can use this tendency to your advantage because you can buy a property for cheap and then charge high rents for a short-term rental. If you time peak season for your nearby attraction well, you will be able to make a lot of money because of the limited spaces which are available. This is a good step to take after you have gained some multi-family properties and have a stable source of long-term income.
In Conclusion:
This chapter focused on getting into the real estate investment market. Capital can be a challenge so there are a few strategies which one can use to get one’s foot in the door. Buying a multifamily unit with either a conventional or an FHA mortgage can help be a relatively cheap first step while creating a stable pool of renters. From there, you can expand your investment strategy to fixer-upper houses and properties near major tourist attractions. These early steps can help you enter a challenging and rewarding real estate investment career.