1031 Exchange: How to Start with Real Estate Investments

If you have ever experienced dealing with a landlord, you probably do not dream of being one. Fielding calls about overflowing toilets, or oversized spiders or cockroaches do not seem like the best job in the world. But if it is done right, investing in some real estate properties can be very lucrative if not too flashy. It can help expand your current investment portfolio and can help you earn additional income.

And a lot of these real estate investments do not require people to show up on tenant’s every call and beck. The problem is that a lot of new investors do not know how or where to invest in this industry. Listed below are some ways to make additional income, ranging from low to high maintenance.

Purchase REITs or Real Estate Investment Trusts

REITs or Real Estate Investment Trusts allow people to invest in real estate properties without physical real estate. REITs are usually compared to mutual funds, and they are firms that own commercial properties like office buildings, apartments, hotels, and retail spaces. REITs usually pay high dividends, which makes it a useful and common investment during retirement.

Investors who do not want or need regular income can reinvest their dividends automatically to help grow the venture further. Are these Investment Trusts, an excellent investment? Yes, they can be, but REITs can also be complicated and varied.

Want to know what REITs are? Visit https://en.wikipedia.org/wiki/Real_estate_investment_trust for more information

Some people trade on exchanges like a stock and others are not publicly traded. This kind of Investment Trusts that people buy can be a huge factor in the number of risks that they are taking on since non-traded Real Estate Investment Trusts are not quickly sold to the public and might be very hard to value.

New investors need to stick to publicly traded REITs, which they can buy through reputable and trusted brokerage companies. Because of that, new investors need to have a brokerage account. If they do not already have one, creating one will only take more or less 15 minutes and a lot of companies require no initial investment: though the trust itself will most likely have a minimum investment.

Use online platforms for real estate investing

If you are familiar with brokerage firms that connect borrowers to reputable investors that are willing to lend the necessary money for different personal needs like the home renovation or a wedding, you will understand more about investing in the real estate industry.

These kinds of platforms can help connect developers with reputable investors who want to finance individual projects through equity or debt. Investors hope to get a monthly or quarterly distribution for taking on a certain amount of risk, as well as paying a specific amount as a fee for the platform. Like a lot of property investments, these are liquid and speculative – you cannot quickly unload these investments the way you trade stocks.

The problem is that you may still need money to make additional money. A lot of these online platforms are only open to reputable and accredited investors that are defined by the SEC or the Securities and Exchange Commission as investors who have earned more than $200,000 or $300,000 for people with spouses, in each of the last two years, or they have a net worth of at least a million dollars, not including primary residences.

Think about spending money on investments in the rental property industry

Some investors did not intend to become an investor when they bought their first rental property. Most of them figured out that purchasing a property would be better compared to spending money renting. Some of them go to websites like Craigslist and look for properties that suit them.

If you are not sure about your investments, try checking companies like 1031 Exchange for apartments or condominiums to buy. The setup will cover all their expenses, as well as provide additional income per month in cash – far from the money they are earning on their 9-5 jobs.

These people entered the market by using a method called house hacking. It is a term coined by a known real estate resource. It means that you are occupying the investment property by renting out a room or by renting out the property in a multi-unit property.

According to experts, house hacking will let investors purchase properties with at least four units, and still qualify for residential loans. Of course, they can always buy and rent out the entire property. All you need to do is to combine all the expenses that are lower than the amount that you charge for the rent.

And if they do not want to be the person who shows up to fix a leak or people who call brokers, they will also need to pay a reputable property manager. If they manage the investment by themselves, they will learn a lot about the real estate industry, and if they purchase a property in the near future, they need to make sure to go to firms with a lot of experience in this type of business.

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