So, other than starting with what you know, what else? Find out how to start investing in real estate in five steps.<\/p>\n Before you start your real estate investment journey, you\u2019ll need to evaluate how much it takes to make your first investment<\/a> and then decide which is the best route based on your available funds. The good news is, getting started at the jumping-off point doesn\u2019t really take much, and then you can work your way up the real estate investment ladder.<\/p>\n You don’t need to be a millionaire to invest in real estate. You can invest as little as $500, or more than $50,000, depending on your financial situation and investing goals.<\/p>\n Real estate is a great long-term investment with lots of possibilities for financial returns. However, it does come with risks, as most investment opportunities do.<\/p>\n These are some questions you\u2019ll want to ask yourself when assessing your own level of risk associated with each type of investment:<\/p>\n When considering the risks of real estate investing, it\u2019s also important to know how they can be combated.<\/p>\n If your investment is a rental property and you have the funds to do so, hiring a reputable property manager<\/a> is a wise idea if your time, desire or capacity to make repairs is limited.<\/p>\n \u201cIt\u2019s usually good to buy something that\u2019s a little bit newer so you don\u2019t have to worry as much about maintenance,\u201d says Poteete. That doesn\u2019t mean it has to be a big house in the fanciest neighborhood \u2014 just something that won\u2019t require a ton of labor.<\/p>\n To mitigate risks such as a drastic change in the housing market, a scarcity of reliable tenants, your liability if someone hurts themselves on your property, or any other dilemma, you should purchase the property through a LLC to protect your personal assets<\/a>.<\/p>\n Liquidity is the ability to turn your investment into cash. When considering how to start investing in real estate, ask yourself what you are using your investment for and how quickly you need to turn a profit. That will inform what type of investment to pursue.<\/p>\n There are two main ways real estate investments make money. The first is producing cash flow. This type of investment starts making money in the first month and delivers steady revenue. This would be your best strategy if you need to make short-term profits that will put money in your bank account right away for things like saving up for a down payment<\/a> on your dream home or paying off debt, like credit cards or student loans.<\/p>\n Cash flow from real estate investments comes from rental properties and renting out your own home.<\/p>\n The other way to make money from real estate investing is property appreciation, or the increase in value of a home over a period of time. If your intention is to achieve a long-term goal, like purchasing a \u201cmove-up home\u201d in the future or to fund your retirement, investing in real estate to accumulate equity<\/a> is the way to go. This avenue is for those investors who are willing to wait for returns.<\/p>\n The options for appreciation investing include both buying your own home or a rental property to then sell once its value has significantly increased. When buying a rental property to sell later and lease out in the interim, you\u2019re making both a short-term and long-term investment.<\/p>\n According to HomeLight\u2019s Top Agent Insights<\/a> from the second quarter of 2019, \u201cThe CoreLogic Home Price Index report found that home prices increased 3.6% year-over-year in April 2019 and projects prices to rise by 4.3% in 2020.\u201d<\/p>\n Multi-family homes with two to four units make 18% of the country\u2019s rental housing stock and, in 2019, averaged 2.4% in return from capital appreciation nationally, including above-average returns in Las Vegas, Denver, and Washington D.C., according to CoreLogic. This is another benefit for investors who rent out these types of properties.<\/p>\n If you\u2019re a real estate investment novice, there are low-risk, efficient options for newbies.<\/p>\n One perk of not having many funds to start investing with is that most of your options are relatively low-stakes and low-risk. You can start from the bottom almost instantly with quick returns.<\/p>\n If you want to dip your toe in the real estate investing pool, these are the best entry-level options to consider:<\/p>\n This could include\u00a0 a guest room, basement or carriage house; you can share the common areas with your renter.<\/p>\n Costs may include making any improvements needed before welcoming a renter in your home and 1% to 4% of the value of the home set aside for repairs.<\/p>\n This is a low-risk option to start generating cash flow for immediately available funds, to help cover the cost of your mortgage<\/a>, or to put into savings for your next investment.<\/p>\n This is essentially the same as the above option, except you will be responsible for cleaning up after guests (you can charge a housekeeping fee to cover this) and setting up for new guests.<\/p>\n As an Airbnb or Vrbo (an acronym for vacation rental by owner) host, you have control over what part of your house to rent out and when, whether that be only part of the house so you don\u2019t have to leave during the guests\u2019 stay, or the entire house that you vacate when guests are present on weekends, during the summer, or whenever you can leave.<\/p>\n Certain real estate crowdfunding investing platforms<\/a>, such as Fundrise and DiversyFund, allow as little as a $500 investment to get started. These are privately traded REITs.<\/p>\n There are some caveats to consider with this option, which include the fact that most of these apps charge fees ranging from 1% to 2.5% of their clients\u2019 managed assets; though it\u2019s fast to start, these apps can take a long time to produce significant returns; and the dividends from these investments may be taxed.<\/p>\n Let\u2019s say you made your very first real estate investment and totally crushed it. The bug bit you and you want more! Well, lucky for you, there\u2019s always more opportunities to be had. Check out where to go when it\u2019s time to make the jump from beginner to intermediate.<\/p>\n Whether it\u2019s a bigger, better home you\u2019re able to buy from the money made renting out your former home, or if you\u2019ve saved up enough for your first home purchase, you\u2019ll be building equity for your future.<\/p>\n This can be accomplished in two ways: investors can purchase a house exclusively to rent out to tenants, or they can purchase a multifamily property where they live in one unit and rent out the others, also known as house hacking.<\/a><\/p>\n The former option requires at least a 20% down payment and an investment mortgage loan, which comes with higher interest rates than primary owner-occupied mortgages \u2014 up to 0.5% to 0.75% more.<\/p>\n The latter option, depending on the price of the home, can be more affordable because it can be purchased for as little as 3.5% down with a FHA loan because it also serves as the buyer\u2019s primary residence.<\/p>\n REITs are companies that own or finance income-producing real-estate, which pays out 90% of their taxable income to shareholders. Investors can purchase individual company stock through a mutual fund or exchange traded fund (ETF) of the stock market. ETFs do not require a $3,000 minimum investment, and the minimum investment for private REITs can range anywhere from $1,000 to $25,000.<\/p>\n REITs perform well for long-term dividends<\/a> but are not good short-term options.<\/p>\n When it\u2019s time to graduate to the real estate investment big leagues, where can you go next? Here are the next-level real estate investment opportunities to keep in your back pocket for when the time comes.<\/p>\n Buying houses that are below market value<\/a>, usually because they need a little or a lot of TLC, and then fixing them up to resell \u2014 or flipping them \u2014 is very much on trend right now. According to CoreLogic, home flipping is at historic highs<\/a>, steadily increasing since 2002. Returns on this type of investment can also be high, with the most profit ranging from 60% up to 95% in certain metro areas. The most profitable areas have the oldest housing, thus more fixer-upper contenders.<\/p>\n You don\u2019t have to be Chip and Joanna Gaines to rock the fixer-upper game. You just have to know how to find these investment gems, says Poteete.<\/p>\n \u201cOf course everyone wants to buy a house 30% below market value, but there are only so many of those properties out there, so you just have to be really savvy in your search. So that really boils down to an investor who is willing to pound the pavement.\u201d<\/p><\/blockquote>\n She says finding them is the trickiest part. Renovating and selling them for a profit is the fun part. \u201cOnce you find them, fixing them up and selling them is easy. Real estate agents are great at helping you sell them.\u201d<\/p>\n The next step to grow your real estate investment portfolio is to buy more properties if you can afford to do so comfortably, using the equity from the first property to help fund the next one. \u201cYou still have to put 20% down, but you\u2019re able to roll some of your equity from your other properties into these new loans, and it can really help you be able to accumulate more in a small period of time,\u201d says Poteete.<\/p>\n So, now you have a solid foundation for what it takes to start investing in real estate. That\u2019s half the battle \u2014 understanding the expectations for how much to put in depending on what you want to get out of it.<\/p>\n As they say, you gotta spend money to make money. Whether that\u2019s a lot or a little at this point in your life, there are always growth opportunities when it comes to real estate. Now you can be one of those people on HGTV, instead of just watching them!<\/p>\n Header Image Source: (Allie Lehman \/ Death to the Stock Photo)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" There are many ways to play the real estate investing game. Find out how to start investing in real estate with this five step guide.<\/p>\n","protected":false},"author":156,"featured_media":17591,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[192,620,626],"tags":[],"class_list":["post-17587","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-for-buyers","category-buy-house","category-real-estate-investing"],"acf":[],"yoast_head":"\n![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/06\/how-to-start-investing-in-real-estate-building-666x381.png\")
<\/a>Step 1: Know your investment level<\/h2>\n
Step 2: Know your risk level<\/h2>\n
\n
Step 3: Ask yourself if liquidity is important<\/h2>\n
If you need immediate cash flow<\/h3>\n
If you\u2019re playing the long game<\/h3>\n
![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/06\/how-to-start-investing-in-real-estate-beginner-666x381.png\")
<\/a>Step 4: Which is the best beginner option?<\/h2>\n
Rent out part of the house you already live in<\/h3>\n
Become an Airbnb host<\/h3>\n
Online crowdfunding investing<\/h3>\n
Step 5: Take the next step<\/h2>\n
Buy a house<\/a><\/h3>\n
Buy a rental property<\/h3>\n
Invest in Real Estate Investment Trusts (REITs)<\/h3>\n
![\"\"](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/06\/how-to-start-investing-in-real-estate-flip-666x381.png\")
<\/a>If you\u2019re on a roll<\/h2>\n
House flipping<\/a><\/h3>\n
Buy more properties<\/h3>\n