With real estate investments, you can use leverage to buy an investment property by only paying a small amount of the upfront cost. You can then pay off the remaining balance in time, plus interest.
Contrary to typical purchases that require 20%-25% down payment, in most cases, you are only required to pay a 5% down payment. That is all it takes to purchase your property. Real estate is perhaps one of the easiest ways to get into investing and it also adds diversity to your portfolio and can be as simple as buying a mutual fund.
Being a landlord isn’t something people usually dream of. Every day calls about plumbing, and electricity issues aren’t the most glamorous things in the world. However, done right, it can be a fantastic way to enhance your income stream.
The only real trouble that comes along with investing in real estate is the fact that most of the time, people don’t know where to start.
1. House Flipping
Though it isn’t the first route you should take, it is a popular one. House flipping is definitely one for the more experienced real estate investors due to the capabilities required. House flipping requires you to be able to oversee or complete the repairs required and it also requires capital.
In less than six months the real estate flippers look to sell their undervalued property for a higher price than it was purchased and will usually avoid investing in properties that need significant repairs. This means that the property will need to have the intrinsic value that is needed to turn a worthwhile profit.
When it comes to the real estate flipper being unable to promptly flip a property, troubles begin to arise. It is highly unlikely that flippers have extra money to pay a long-term mortgage on top of their own.