It’s a well-known fact that people often “strike it big” by investing in real estate. While it’s not a get-rich-quick scheme, lots of millionaires have made at least some of their money through real estate. According to Morgan Stanley, around 77 percent of entrepreneurial millionaires own real estate. And it’s not just the top one percent that are able to do this. Many people with very little or no money are starting out in real estate. Here are some ideas on how you too can get started.
The 21st century is the century of innovative new ways to make money. And real estate investments are not exempt. You can get started in real estate with as little as $1,000. There are more than 100 real estate crowdfunding options and they’re said to outperform traditional stocks and bonds on a regular basis. The top five are PeerStreet, Real Crowd, Realty Mogul, Realty Shares, and Acquire Real Estate. Be aware, however, that even this type of investing also requires an investment of your time to learn the ropes.
Buy a House
You can buy a house with as little as $5,000 or $10,000. There are options for zero-down payments or small down payments (five percent or less). If you’re a veteran, you can apply for a zero-down VA loan. If you’re not a veteran, you can try for a 3.5 percent FHA loan or a regular loan with a five percent down payment. Better yet, you can buy a house in the country (or a small town) with the USDA’s Rural Development zero-down program. You do need to be willing to live in it. Once you’ve bought a house, you can work your way towards either selling it for profit or buying a second property that you can rent out.
Try Real Estate Wholesaling
This is a fancy term for house-flipping. When you’re trying to make faster returns on real estate, you can buy up lower-cost properties (such as bank-owned real estate, foreclosures, fixer-uppers, off-market properties, etc.) and sell them again. Some investors flip houses in as little as 30 days. Sometimes they make repairs and other times they simply resell the house as is. Repairs can add up quickly and the longer the house takes to sell, the more the costs stack up. The key is to sell the house as quickly as possible.
Invest in Mortgage Securities
There are two types of real estate investments—equity and debt. If you loan money to someone wanting to purchase property, you are investing in debt (or mortgage securities). If you are the one purchasing or investing in ownership of a property, you are investing in equity. Both kinds of investments carry risks. With debt investment, you are assuming the risk of loan defaults. With equity, you assume responsibility for repairs and operational expenses.
There are many ways to get started in real estate. With a bit of research, you can choose the option that works best for you. Combine that with diligence and a long-term strategy and you just might be able to become a millionaire in a few years.