Check out your real estate options today. / Credit: Maria Maar
If you’re looking to generate some passive income, dipping your toes into the real estate game is a common suggestion. But real estate investing refers to a wide range of potential strategies and asset types and choosing the right path is crucial in order to be successful.
Plus, you’ll want to make sure you get a full picture of the costs and fees associated with buying a new home or property. Mortgage experts can help you determine how much you can afford.
That path will be different for every investor, so it’s important to understand the pros and cons of each method before proceeding. We’ll break down the basics of real estate investing below, so you can get started with confidence.
Types of real estate investing
There are many viable options when it comes to real estate investing, but the methods vary wildly. Here are the most popular ways to get started.
House hackingBuying a rental propertyFlipping homesREITsCrowdfundingHouse hacking
House hacking is when you buy a home with multiple units, like a duplex or triplex, and live in one of the units while renting out the rest. Many investors find that the other units will cover the mortgage, maintenance and utility costs while leaving room for profit.
See what kind of mortgage rates you qualify for today to start crunching the numbers.
The downside of house hacking is that you have to live next to your tenants, so there will be less privacy. You may also have more frequent maintenance requests than if you were an off-site landlord.
Buying a rental property
Buying a home or apartment to rent out is one of the oldest real estate investment strategies – but it can also be one of the most challenging. To get started, you’ll have to find a property priced appropriately that you can purchase and then rent for a profit.
You also must decide between short-term and long-term rentals. A short-term rental with a company like Airbnb or VRBO can bring in substantial income, especially if you live in a tourist haven. Having a short-term rental may bring in more cash, but it also requires more day-to-day work.
If you have a long-term rental and don’t want the stress of late-night phone calls from tenants, you can outsource the work to a property management company. This will provide more peace of mind, but you’ll …….