Real estate investing is a smart way to get started with your finances and build wealth. If you’re not familiar with real estate investing, though, it can be overwhelming, especially if you’re starting out with little money or experience in this field. That’s why we’ve put together this guide!
Set Up a Real Estate Investing LLC
You should consider setting up a real estate investing LLC (L-L-C or Limited Liability Company) if you want to start investing in real estate. This is a business structure that provides liability protection for your personal assets, and it has tax benefits as well.
How Much Money Do You Need to Get Started?
How much money do you need to get started? The short answer is it depends on the type of property you want to buy. If you’re buying an apartment building, a house, or even a small piece of land, then the cost of getting started could be anywhere from $5k-$30k depending on whether or not you’ll be paying cash for your acquisition or if it’s in contract and needs repairs done.
If we look at this question as an investment opportunity: How much money do I need to make back my initial investment? Again this is going to depend on several factors such as location and condition of the property but generally speaking it will take between 2-3 years before breaking even while making monthly mortgage payments along with other expenses associated with purchasing real estate like agent fees & taxes. What’s important here though is understanding that no one gets into this business expecting overnight success, rather they’re looking for long term returns where over time their properties increase in value enough so that they can sell them at a profit.
Make Sure You Have the Cash to Buy a Property
Before you buy a property, make sure you have plenty of money on hand. You’ll need enough cash to cover the down payment (usually 10%–20% of the price), closing costs, rehab costs, and monthly mortgage payments. If your bank will only lend you 80% of the purchase price of a home—and most banks do not lend more than 80%—you may also need funds on hand for carrying costs until you sell it at a profit.
Look at Your Financing Options for Your First Deal
Once you’ve settled on a property, it’s time to think about financing. Your first purchase doesn’t need to be a five-percent down payment or anything like that. In fact, most people start out with a 10 percent down payment and put the rest of the money they have into their down payment bucket until they can get enough cash together to close out their buyer’s side of the transaction.
Consider Investing in Crowdfunded Real Estate
Crowdfunding is a new way to invest in real estate. It’s an online marketplace where everyday people can invest as little as $25 and earn returns on their money. Crowdfunded properties are managed by these companies, who handle all of the work and maintenance so you don’t have to worry about it! The best part is that it’s a great way for beginners like yourself to get started investing without doing any of the heavy lifting yourself.
