Top Real Estate Investing Strategies for Beginners

Many people find real estate the tried and true method for safely keeping and potentially growing your investment. Unlike stocks and other investment opportunities, this one doesn’t require some Wall street know-how to make it work. Though it sounds simple enough, there are some tips and tricks to achieve a good return on your investment property. Aside from having cash and buying a property that’s for sale, there’s some finesse to it. You’ll need to familiarize yourself with the market, what it offers, what it needs, and the best times to act. Hopefully, by the end of this article, you’ll know everything you might need regarding real estate investing strategies for beginners and how to be successful as an investor.

Consider Rental Properties

A property with dependable tenants will continuously produce cash flow. Screening rental property applications thoroughly is one way to make sure of this. It’s crucial for investors searching for passive income to check their future tenants comprehensively. A proper way to do it will be to ask for a security deposit, tenant upkeep, and even prepare for evictions if the situation demands it. Get a breakdown of all the fees and charges related to a property when considering buying it with an intent to rent it.

Additionally, it is crucial to know what amenities to provide tenants and how to set rent appropriately in relation to the market. Too few amenities or excessively high rent, and the property may remain vacant. So be up to date with the latest prices and properties on the market when strategizing your offer.

Rehabbing the property

Rehabbing is another word for buying and holding. An investor must carefully consider the return on investment of any upgrades and expenditures during the holding time and appropriately calculate it for this strategy to succeed. The basic plan is that real estate typically increases in value over time. Using the money from a property sale to buy one or more investment properties of equal or greater value is one method to minimize the tax burden when selling a home.

Any property class, from single-family homes to apartment buildings, can be purchased and held. Florida offers plenty of opportunities when considering a good location to invest in a property, regardless if you are interested in residential or commercial properties. Investing in commercial real estate in Florida is always a good idea, and there are many benefits of this. Endless beaches, great weather, and great people are just some things the Sunshine State offers. Calculating the cap rate, which indicates how long it will take to recover the initial investment and turn a profit, is also crucial.

Flipping is a good real estate investing strategy for beginners

The distinction between remodeling a home for long-term renting and flipping a home is that the latter involves renovating before selling. How quickly the property sells serves as a benchmark for flipping success. Flippers look for real estate deals below market value and swiftly resell them. However, if a property is flipped, the seller will pay more capital gains taxes than if they kept it for at least two years. A system is in place for successful flippers, including access to bulk-cost materials, a crew that can do quality remodeling at a reasonable price and time frame, and a real estate agent who can sell it closest to your expectations.

Reside in your flip

A live-in flip combines elements of rehabbing and flipping. In this instance, the homeowner resides there while it is being renovated. If you previously resided in a property you plan on selling, you can avoid paying capital gains taxes. The primary requirements are:

• That you live there and that the property is your primary home 
• For two out of the five years prior to the sale, the property has to be your primary home 

There is a chance that an investor will have to leave during a live-in flip. In that instance, the investor should consult a tax advisor for the best advice and the course of action for the administrative process regarding the sale. Though it comes to the relocation itself, it will go much smoother with a reliable moving company. The website getmovedtoday.com suggests hiring a licensed moving company for that job. By going with a licensed company, you’ll know that your possessions will be in safe hands and that everything will be organized and conducted by the letter of the law.

Put rental income to use

Many buy-and-hold real estate investors adopt the complementary approach of reinvesting rental revenue. This represents one of the top real estate investing strategies for beginners since it can help you get the ball rolling. Net cash flow from one rental property is preserved until there is enough money for the down payment on a second rental property, a strategy often known as the snowball effect. By following this strategy, net cash flow from both rental properties is saved until there is enough money for a third rental property.

The snowball of income earned grows as an investor’s portfolio of rental properties expands. To pay off a mortgage on the property more quickly, some owners also reinvest rental revenue in extra mortgage payments. The investor performs a cash-out refinance to convert accumulated equity into cash so they can buy another rental property once they have sufficient equity from combined appreciation and mortgage prepayments.

Crowdfunding is another real estate investing strategy for beginners

Online real estate investment platforms are called crowd funds. They allow investors to pool their funds to purchase shares of high price commercial and residential properties. These properties can be newly constructed homes, apartment complexes, and commercial real estate that are market stabilized. Crowdfunding can be a great method to get exposure to some exclusive listings that are out of reach for most investors.

Shares often have lockup periods until a project is stable or during times of economic instability. This is one of the disadvantages of crowdfunding. Investors must also rely on a good crowdfund sponsor to find profitable prospects, finance, and build the project. Though you’re not yet at a crowdfund sponsor level, at least you’ve dipped your toes in the water regarding real estate investing strategies for beginners.

Disclosure: Treasure Property Group is solely a real estate company; please seek an accountant for support and guidance in the area of taxes.

By. Betty White & Daniella Parra