{"id":6421,"date":"2018-11-26T08:56:54","date_gmt":"2018-11-26T16:56:54","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=6421"},"modified":"2026-04-15T01:59:30","modified_gmt":"2026-04-15T08:59:30","slug":"is-real-estate-a-good-investment","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/is-real-estate-a-good-investment\/","title":{"rendered":"Is Real Estate a Good Investment? 4 Ways to Cash In on the Stability of Housing"},"content":{"rendered":"<p>\u201cReal estate is a good investment, especially in the long term,\u201d says top real estate agent and investment properties specialist <a href=\"https:\/\/www.homelight.com\/agents\/collier-swecker-al-87434\">Collier Swecker<\/a>, who\u2019s been endorsed by America\u2019s trusted voice on money, Dave Ramsey. \u201cThe stock market, where most people have their 401(k)s, ebbs and flows.\u201d<\/p>\n<p>Real estate values fluctuate month to month (and everyone <a href=\"https:\/\/money.cnn.com\/2008\/12\/30\/real_estate\/October_Case_Shiller\/index.htm?postversion=2008123014\">remembers 2008<\/a>) but steadily\u00a0<a href=\"https:\/\/www.entrepreneur.com\/article\/304860\">increase over time<\/a>, making it an <a href=\"https:\/\/www.investopedia.com\/terms\/a\/appreciation.asp\">appreciating asset<\/a>. Plus, real estate has an intrinsic value as a <a href=\"https:\/\/www.investopedia.com\/terms\/r\/realasset.asp\">real, physical asset<\/a>, unlike stocks which are paper or <a href=\"https:\/\/www.investopedia.com\/ask\/answers\/083115\/are-stocks-real-assets.asp\">financial assets<\/a>.<\/p>\n<figure id=\"attachment_6424\" aria-describedby=\"caption-attachment-6424\" style=\"width: 1600px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment.png\" target=\"_blank\"><img decoding=\"async\" width=\"775\" height=\"318\" src=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-775x318.png\" class=\"attachment-content size-content\" alt=\"A graph of the composite house index of 20 cities over time.\" srcset=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-775x318.png 775w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-768x315.png 768w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-1536x631.png 1536w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-64x26.png 64w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-128x53.png 128w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-192x79.png 192w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-432x177.png 432w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-500x205.png 500w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment-800x329.png 800w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/graph-is-real-estate-a-good-investment.png 1600w\" sizes=\"(max-width: 775px) 100vw, 775px\" \/><\/a><figcaption id=\"caption-attachment-6424\" class=\"wp-caption-text\">Source: (<a href=\"https:\/\/fred.stlouisfed.org\/series\/SPCS20RSA\">fred.stlouisfed.org<\/a>)<\/figcaption><\/figure>\n<p>So why isn\u2019t everyone and their dog out there investing in real estate? Well, there\u2019s a <a href=\"https:\/\/www.daveramsey.com\/blog\/how-to-invest-in-real-estate\">learning curve and it costs a lot of money to get started<\/a>.<\/p>\n<p>That shouldn\u2019t deter you from the opportunity, but you do need to know what type of real estate investing is right for you, whether it\u2019s:<\/p>\n<ul>\n<li>Homeownership<\/li>\n<li>House flipping<\/li>\n<li>Owning rental property<\/li>\n<li>Putting money into REITs (real estate investment trusts)<\/li>\n<\/ul>\n<p>Let\u2019s go through the risks and benefits of each avenue, and then you can make smarter decisions about becoming a real estate investor.<\/p>\n<h2>1. Take the homeownership plunge<\/h2>\n<p>Do you remember the first time you thought about buying your own home? In that moment you were considering becoming a real estate investor.<\/p>\n<p>Most first-time home buyers approach the process with their lifestyle needs at the forefront. These buyers focus on a property\u2019s appearance, finishes, comfort, and convenience first.<\/p>\n<p>However, when you look at your primary residence as an investment, your first priority is purchasing a property that has the best chance of achieving a significant increase in value over time.<\/p>\n<p>\u201cYou don\u2019t really make your money in real estate investing on the sale of a property. You make your money on the purchase,\u201d Swecker explains.<\/p>\n<p>It all comes down to asking the right questions about the house you want to buy. \u201cAm I in the right buy? Am I in the right city? Am I in the right town? Am I in the right part of town that actually has room to grow relative to prices increasing?\u201d<\/p>\n<p>Many first-time starter home buyers plan on selling <a href=\"https:\/\/money.usnews.com\/investing\/articles\/2017-05-10\/when-is-buying-a-home-a-good-investment\">5 to 10 years\u00a0<\/a>down the line, so they can buy a larger home as their family grows or their income increases.<\/p>\n<p>When you buy your first house with an investor mindset, you\u2019re planning on using the profit from its eventual sale to provide a sizable down payment on your new home.<\/p>\n<p>If you play your cards right, that sizable down payment can lead to a mortgage payment on a more expensive home that\u2019s the same or less than the mortgage payment on your starter home. Then, assuming you\u2019ve held onto this home and paid off your mortgage, its sale can <a href=\"https:\/\/www.homelight.com\/blog\/should-you-sell-house-rent-retire\/\">fund your retirement<\/a>.<\/p>\n<p>There are some challenges to homeownership, however.<\/p>\n<p>Keep in mind that while real estate is an appreciating asset, the wear and tear on a property over time actually causes the physical structure to depreciate\u2014especially without proper maintenance.<\/p>\n<p>If you want to split hairs, it\u2019s actually the <a href=\"https:\/\/www.investopedia.com\/articles\/mortgages-real-estate\/08\/housing-appreciation.asp\">land your home is built on<\/a> that appreciates, which is why location has such a big impact on a property\u2019s value.<\/p>\n<p>Experts recommend budgeting at least <a href=\"https:\/\/www.thebalance.com\/home-maintenance-budget-453820\">1% of your home&#8217;s value<\/a> a year for maintenance. While you may not spend that much, set it aside anyway so you\u2019re financially prepared to pay for big-ticket expenses, such as a new HVAC, roof replacement, or foundation repairs.<\/p>\n<p>Homeownership has other <a href=\"https:\/\/www.bankrate.com\/mortgages\/home-services-survey-0218\/\">hidden costs<\/a> that you may not think to budget for if you\u2019ve never owned a home before. First-timers forget that they\u2019ll need to pay <a href=\"https:\/\/www.usatoday.com\/story\/money\/personalfinance\/2017\/04\/16\/comparing-average-property-taxes-all-50-states-and-dc\/100314754\/\">property taxes<\/a>, additional utilities such as snow removal or septic services, and maybe even HOA dues.<\/p>\n<p>Not to mention real estate isn\u2019t a <a href=\"https:\/\/www.investopedia.com\/ask\/answers\/032715\/what-items-are-considered-liquid-assets.asp\">liquid asset<\/a>. It can take months to sell a home, which means you can\u2019t have access to that invested cash in a hurry.<\/p>\n<p>True, you can access your capital with a home equity loan. However most banks require that the loan amount be a <a href=\"https:\/\/blog.credit.com\/2018\/10\/5-things-to-know-about-home-equity-loans-76738\/\">minimum of $10,000<\/a>, and it can take some time to build up that much equity.<\/p>\n<p>While it\u2019s not completely risk-free, owning your own home does provide long-term financial security. However, you\u2019re not going to get rich through this type of real estate investing.<\/p>\n<p>If you\u2019re looking for an investment that\u2019ll actually produce a profit, there are other real estate options to consider.<\/p>\n<figure id=\"attachment_8765\" aria-describedby=\"caption-attachment-8765\" style=\"width: 700px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip.jpg\" target=\"_blank\"><img decoding=\"async\" width=\"700\" height=\"395\" src=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip.jpg\" class=\"attachment-content size-content\" alt=\"A real estate investment house that is being flipped.\" srcset=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip.jpg 700w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip-64x36.jpg 64w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip-128x72.jpg 128w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip-192x108.jpg 192w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip-432x244.jpg 432w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-flip-500x282.jpg 500w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/a><figcaption id=\"caption-attachment-8765\" class=\"wp-caption-text\">Source: (Andrew Angelov\/ Shutterstock)<\/figcaption><\/figure>\n<h2>2. Get into house flipping<\/h2>\n<p>Turn on any home improvement network and you\u2019ll think the whole world is getting rich flipping houses. While house flipping is on the rise, it\u2019s nowhere near as easy\u2014or profitable\u2014as it seems on TV.<\/p>\n<p>In reality, flipping is a high-risk business offering profit margins as low as <a href=\"https:\/\/www.washingtonpost.com\/news\/where-we-live\/wp\/2018\/04\/02\/why-you-wont-get-rich-flipping-homes\/?noredirect=on&amp;utm_term=.b3b861cd6b25\">10 to 15%<\/a>. \u00a0As those flipping shows demonstrate, the remodeling side of flipping can be fun\u2014but it\u2019s the <a href=\"https:\/\/www.homelight.com\/blog\/how-to-get-started-flipping-houses\/\">riskiest venture<\/a> if you don\u2019t know what you\u2019re doing.<\/p>\n<p>\u201cFlips are risky because you don\u2019t gain from long-term natural appreciation,\u201d says \u00a0<a href=\"https:\/\/www.mashvisor.com\/blog\/author\/dandreevskayahoo-com\/\">Daniela Andreevska<\/a>, Content Marketing Director at Mashvisor, a real estate analytics tool which helps real estate investors. \u201cInstead, you have to force appreciation on the property [through the remodel] in order to make profit.\u201d<\/p>\n<p>And it\u2019ll cost you more to flip than you might expect.<\/p>\n<p>For starters, house prices are still rising\u2014even for homes being sold \u201cas-is\u201d\u2014which means you\u2019ll probably be paying more for your investment property than you expect.<\/p>\n<p>Refurbishing your flip will likely be pricier than you\u2019re planning on, too. All those remodeling expenses you see listed on house flipping shows don\u2019t reflect the true costs.<\/p>\n<p>The truth is that they\u2019ve likely received their building materials at a discount (or free) in exchange for the free advertising they get for product featured on the show.<\/p>\n<p>Plus, the program\u2019s production budget pays for the professional craftsmen and construction crew who do the remodeling work behind the scenes.<\/p>\n<p>Aside from the money you\u2019ll need to buy the home and pay for the remodel, you need a sizable amount of <a href=\"https:\/\/fitsmallbusiness.com\/fix-and-flip-loans\/\">reserve capital<\/a> to keep you afloat when things go wrong.<\/p>\n<p>Perhaps you\u2019ll discover a <a href=\"https:\/\/www.homelight.com\/blog\/pest-inspection-before-closing\/\">termite infestation<\/a>, or find that the <a href=\"https:\/\/www.homelight.com\/blog\/find-plumbers\/\">plumbing needs replacing<\/a>, or maybe home prices will temporarily fall, forcing you to hang onto the home before selling.<\/p>\n<p>And if home prices don\u2019t rise before you run out of money, you\u2019ll wind up breaking even or selling at a loss.<\/p>\n<figure id=\"attachment_8767\" aria-describedby=\"caption-attachment-8767\" style=\"width: 700px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental.jpg\" target=\"_blank\"><img decoding=\"async\" width=\"700\" height=\"385\" src=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental.jpg\" class=\"attachment-content size-content\" alt=\"A rental property that is also a real estate investment.\" srcset=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental.jpg 700w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental-64x35.jpg 64w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental-128x70.jpg 128w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental-192x106.jpg 192w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental-432x238.jpg 432w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-rental-500x275.jpg 500w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/a><figcaption id=\"caption-attachment-8767\" class=\"wp-caption-text\">Source: (quinntheislander\/ Pixabay)<\/figcaption><\/figure>\n<h2>3. Scoop up rental properties for the long haul<\/h2>\n<p>Reality TV makes it seem like flipping is all the rage, but the truth is, owning rental properties is the bigger business in real estate investing. Not only is it less risky than flipping, it\u2019s also a long-term moneymaker.<\/p>\n<p>\u201cWith rental properties, you\u2019re making money in two different ways,\u201d says Swecker.<\/p>\n<blockquote><p>\u201cYou\u2019re making money from the natural appreciation of the home, and you\u2019re making money from your renter. And that rental income is paying your mortgage down and paying you back for the equity you put in.\u201d<\/p><\/blockquote>\n<p>Unlike many stock market options, rental properties provide a monthly cash flow. And with <a href=\"https:\/\/www.nreionline.com\/multifamily\/apartment-rent-growth-accelerates-third-quarter-2018\">rental rates on the rise<\/a>, the income generated from your renters has the potential to cover the mortgage payment, house-related expenses, and still leave you with money you can take to the bank.<\/p>\n<p>Rental property owners can also count on significant tax breaks, thanks in part to the <a href=\"https:\/\/www.nolo.com\/legal-encyclopedia\/how-the-republican-tax-plan-affects-landlords.html\">Tax Cuts and Jobs Act<\/a> that went into effect January 1, 2018. Among other benefits, as a landlord you won\u2019t be required to pay self-employment taxes and the individual tax rates on your rental property income is lower.<\/p>\n<p>However, buying a rental property isn\u2019t cheap.<\/p>\n<p>\u201cThe largest expense is the price of the property and most will have to take a mortgage loan in order to buy their first rental property,\u201d says Andreevska. \u201cMost lenders require a down payment of 20% of the property price. For example, according to Mashvisor data, the median property price in Detroit, MI, is $177,000, so the down payment would add up to $35,400. Meanwhile, the median property price in Anaheim, CA is $623,000, which results in a down payment of $124,600.\u201d<\/p>\n<p>Whether it\u2019s a vacation rental or long-term lease you\u2019re looking for, finding the right rental property is key.<\/p>\n<p>For example, if you\u2019re looking to lease your house to long-term renters, it\u2019s best to buy a mid-sized home because more renters will be able to afford it.<\/p>\n<p>On the other hand. If you\u2019re buying in a coastal tourist destination city, a luxury home with a private pristine beach may be the smarter choice.<\/p>\n<p>As the owner of either rental property type, you\u2019ll need to factor in the mortgage, monthly maintenance expenses, and annual expenses like taxes or pest control treatments. It\u2019s also wise to pay <a href=\"https:\/\/www.nolo.com\/legal-encyclopedia\/landlord-hire-property-management-company-29885.html\">5 to 10% of your rent revenue<\/a> to hire a professional property management company.<\/p>\n<p>A professional property manager will save you the headache of vetting tenants, collecting rent, and handling complaints, repair requests and other potentially tense communications with your renters.<\/p>\n<p>\u201cYou\u2019ll make more money in the long run by taking care of not only the home but also the tenants,\u201d advises Swecker.<\/p>\n<figure id=\"attachment_8766\" aria-describedby=\"caption-attachment-8766\" style=\"width: 700px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table.jpg\" target=\"_blank\"><img decoding=\"async\" width=\"700\" height=\"387\" src=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table.jpg\" class=\"attachment-content size-content\" alt=\"Business people working at a real estate investment trust company.\" srcset=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table.jpg 700w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table-64x35.jpg 64w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table-128x71.jpg 128w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table-192x106.jpg 192w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table-432x239.jpg 432w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/is-real-estate-a-good-investment-table-500x276.jpg 500w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/a><figcaption id=\"caption-attachment-8766\" class=\"wp-caption-text\">Source: (Julien Tsujimoto\/ Death to the Stock Photo)<\/figcaption><\/figure>\n<h2>4. Offload your responsibility to a Real Estate Investment Trust<\/h2>\n<p>House flipping and rental property ownership require at least some amount of sweat equity. If you\u2019d rather have a secure real estate investment income without the hands-on hassle, investing in a Real Estate Investment Trust (<a href=\"https:\/\/www.reit.com\/what-reit\">REIT<\/a>) may be your best option.<\/p>\n<p>As a REIT investor, you\u2019re putting your money into a company that owns, operates or finances income-producing real estate, such as commercial office buildings or residential\u00a0<a href=\"https:\/\/www.reit.com\/what-reit\/reit-sectors\/residential-reits\">apartment complexes<\/a>.<\/p>\n<p>With this type of real estate investment, you bear no responsibility (or have any control over) the choice of tenants or the types of properties purchased.<\/p>\n<p>For the most part, you\u2019re safe in trusting the REIT decisionmakers, since the whole\u00a0<a href=\"https:\/\/www.kiplinger.com\/slideshow\/investing\/T044-S001-the-15-best-reits-for-retirement-income\/index.html\">purpose of the REIT<\/a>\u00a0is to make money.<\/p>\n<p>And when the trust makes money, you make money\u2014without any significant risk of losing your investment (if you\u2019ve invested with a <a href=\"https:\/\/www.investor.gov\/introduction-investing\/basics\/investment-products\/real-estate-investment-trusts-reits\">vetted REIT<\/a> rather than a <a href=\"https:\/\/mf.freddiemac.com\/lenders\/fraud-prevention\">potentially sketchy<\/a> private investment group).<\/p>\n<p>\u201cYou have the equivalent of a stock in a REIT. They\u2019re publicly traded and the Security Exchange Commission has oversight over them,\u201d advises Swecker. \u201cBut the problem with some private real estate investment groups is that you don\u2019t know where your money is going. I\u2019m not against partnerships, I\u2019m against partnering with people you don\u2019t know.\u201d<\/p>\n<p>While REITS are probably the most risk-free way to invest in real estate, they may not be the most profitable. The dividends you\u2019ll likely see from a REIT investment is\u00a0<a href=\"https:\/\/www.reit.com\/data-research\/reit-market-data\/reit-industry-financial-snapshot\">around 4%<\/a> (with a high of\u00a0<a href=\"https:\/\/www.forbes.com\/sites\/marcprosser\/2017\/07\/19\/data-proves-reits-are-better-than-buying-real-estate\/#272dd670d6b7\">approximately 7%<\/a>), which you\u2019ll only receive as quarterly payouts (although there are some that\u00a0<a href=\"https:\/\/www.dividend.com\/how-to-invest\/5-reits-that-pay-monthly-dividends\/\">pay monthly<\/a>).<\/p>\n<figure id=\"attachment_6425\" aria-describedby=\"caption-attachment-6425\" style=\"width: 512px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment.png\" target=\"_blank\"><img decoding=\"async\" width=\"512\" height=\"301\" src=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment.png\" class=\"attachment-content size-content\" alt=\"An infographic that shows the six steps to real estate investing.\" srcset=\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment.png 512w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment-64x38.png 64w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment-128x75.png 128w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment-192x113.png 192w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment-432x254.png 432w, https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2018\/11\/steps-is-real-estate-a-good-investment-500x294.png 500w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><\/a><figcaption id=\"caption-attachment-6425\" class=\"wp-caption-text\">Source: (<a href=\"https:\/\/www.daveramsey.com\/blog\/how-to-invest-in-real-estate\">daveramsey.com<\/a>)<\/figcaption><\/figure>\n<h2>Are you ready to invest in real estate?<\/h2>\n<p>Now that you know your options, deciding if you\u2019re ready to invest in real estate comes down to answering two questions:<\/p>\n<ol>\n<li>How much money do I have to invest?<\/li>\n<li>How much risk am I willing to take?<\/li>\n<\/ol>\n<p>For most REIT investments you\u2019ll only need <a href=\"https:\/\/www.investopedia.com\/financial-edge\/0712\/how-much-money-do-you-need-to-invest-in-real-estate.aspx\">$500 to $2,500<\/a> as a minimum investment to get started. The other three options require a lot more financially.<\/p>\n<p>To buy a house (whether it\u2019s your first, a flip, or a rental property), you\u2019ll need a <a href=\"https:\/\/www.mashvisor.com\/blog\/what-is-a-good-credit-score\/\">great credit score<\/a> and enough cash to make a <a href=\"https:\/\/www.forbes.com\/sites\/financialfinesse\/2017\/08\/09\/should-you-invest-in-rental-real-estate\/#134f85115c15\">20% down payment<\/a>.<\/p>\n<p>It\u2019s also wise to consult with a <a href=\"https:\/\/www.businessinsider.com\/financial-planner-what-to-know-before-investing-in-real-estate-2017-11\">financial planner<\/a> experienced with real estate investing. Otherwise those hidden housing costs might push your debt-to-income ratio above the <a href=\"https:\/\/www.consumerfinance.gov\/ask-cfpb\/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791\/\">recommended 43%<\/a>.<\/p>\n<p>This professional assessment of your finances will also tell you if you\u2019re financially sound. If you are, you can take on the riskier real estate investment options, like flipping, or if you\u2019re better off starting with a small REIT investment.<\/p>\n<p>Locking a large chunk of your savings into an <a href=\"https:\/\/www.investopedia.com\/terms\/i\/illiquid.asp\">illiquid asset<\/a> like real estate can be an intimidating proposition. But if you buy the right property, you\u2019ll get a larger payoff on that investment in the long run.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Home values rise over the long haul. So why isn\u2019t everyone and their dog a real estate investor? Well, it\u2019s not as easy as it looks. <\/p>\n","protected":false},"author":37,"featured_media":8764,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[329,319],"tags":[],"class_list":["post-6421","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-flipping","category-selling-advice"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.0 (Yoast SEO v27.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Is Real Estate a Good Investment, and Which Route Should You Take?<\/title>\n<meta name=\"description\" content=\"Home values rise over the long haul. So why isn\u2019t everyone and their dog a real estate investor? 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