Many people are interested in real estate investing, but some a hesitant to take the leap because they assume it is just too hard to get into it. Here are three little-known reasons it seems more complex than it should be:
Here are three little-known reasons why real estate investing seems more complex than it should be:
1. Investments Are Not ‘One-Size-Fits-All’
There are many different kinds of real estate investments. The question is, what do you want to do? Are you interested in flipping homes, owning rental properties, becoming a notes investor, or would you rather invest in tax liens, small apartments, large apartments, commercial real estate, commercial development, and so forth? This is strictly your decision.
For instance, I teach new investors rental property ownership that falls in the sub-$30,000 price range. I do this because it creates yearly assets that are able to produce income, creating long-term wealth. This also provides amazing tax benefits that you can’t get via most other forms of investing.
With so many options out there, I suggest doubling down and choosing one investment strategy that works for your budget and lifestyle. Each investment strategy comes with its own time frame, investment price, learning curve, tax benefits, and wealth generation profile.
2. Living in an Expensive Area Doesn’t Mean You Have to Put the Brakes on Your Real Estate Investing Goals
If you live in New York, Connecticut, California, Colorado, or another expensive area of the country, it’s recommended that $100 and $200 a door makes absolutely no sense, especially when the only property in that low price range might be a $240,000, one-bedroom condo. Why would you leverage yourself that much—taking on the responsibility of home ownership, its tenants, while simultaneously educating yourself on the complexities of eviction law—to make $200 a month in income? Even if it appreciates—which is highly unlikely—you could just as easily make that level of cash flow by doing a number of other side hustles that are far less complicated and time-consuming. There are a number of other markets worth investing in, so let’s find those!
3. Finding the Right Educator Makes a BIG Difference
There days, it’s hard to know who you can trust to give you accurate and relevant information. Do your research to find the right resources that can teach you the ins-and-outs of investing in this niche.
When I started teaching people how to make extra cash by investing in sub-30,000 rental properties in working class neighborhoods, I got a lot of pushback from real estate investing “veterans.” However, it quickly became apparent to me that many of the investors that advised against this strategy were not only clueless about how to navigate these neighborhoods, they had never even stepped foot in these places before. As the more affordable option for most folks, generating income by returning to the neighborhoods we grew up in makes this goldmine all the more appealing.
At the end of the day, this is a new financial skill-set that can be learned. Best of all, once you do learn the necessary skills and the overall investing process, it is simple to duplicate. You can go at it alone, or you can mitigate some of the risk step-by-step—it’s all up to you. However, we need to look at building long-term wealth. This is why it’s important to talk to the right people, who not only have a firm comprehension of real estate, but who also understands our language, needs, and our communities.
Lisa Phillips teaches new investors and full-time professionals how to invest in rental properties from $30,000 and up. To find out more about Phillips, click here. You may also follow her on Twitter via the handle @affordablerei.