How to Get Started In Real Estate Investing As a Young Professional
Many young professionals are intimidated by the prospect of investing in real estate because they believe that this type of venture will require an initial investment of thousands of dollars. In the past, this certainly was true, but today, you do not have to have five figures in the bank to become an investor but you will need to save money. The road to real estate investment begins with having a reliable financial plan, and this can be achieved through education.
It is critical to know what real estate investment options are available to you, because some will have bigger investment requirements and higher risks than others.
Traditional Real Estate Investments
The traditional path to real estate investment consists of purchasing rental properties and renting them out. Although a popular method of diversifying one’s portfolio and generating an income stream, this method does have its own set of cons that you should familiarize yourself with before you take the plunge.
First and foremost, it requires a significant investment of time. You must peruse hundreds of listings and tour properties in person before deciding which property is ideal for rental purposes. In addition to this, you must also invest time into locating the right tenants, staging the home, and then showing it to prospective renters. There are also property management and maintenance duties that must be taken into consideration.
If the property is bought as an owner occupied home, there is an associated risk wherein you are held legally responsible for a sizable mortgage loan on the home with a considerable risk should there be a decline in the housing market.
Real Estate Investing Through Crowdfunding
If the amount of work required by traditional real estate investing does not sound appealing to you, but you still want to take advantage of the benefits that real estate investing offers, another option would be crowdfunded real estate investments.
Crowdfunded investing is a popular option among young professionals. With this form of investing, a group of people pool their financial resources together and then either invest that money or lend it to more experienced real estate investors. The primary benefit to this type of investing is that you are able to reap the benefits of a skilled investor’s experience with a reduced amount of risk on your behalf and a minimal investment of your time.
There is also the added benefit of being able to an investment’s earnings history and stats online before deciding if you want to invest your money in it. Your investment can easily be managed online, and at the end of the year, you will be provided with a summary of its performance and tax information.
While crowdfunding is quickly growing in popularity, it is still a relatively young form of investment. You will need to conduct meticulous research on a company’s legitimacy and their offerings before deciding whether or not they will be a good fit.
Both forms of investing have their own set of benefits and drawbacks, and which option you choose will primarily depend on how much time and effort you want to put into your real estate investments.
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