If you’ve been able to make it through 2020 financially unscathed, you may be looking at how you can take advantage of current economic situations in order to get yourself on even more solid footing in your financial future. One option you may be considering is investing in real estate. However, because real estate investing also comes with some real risks, it’s vital that you get educated about real estate investing before you jump into it.
For those venturing down this road for the first time, here are three tips for getting started with real estate investing.
Consider Starting With Short-Term Rentals
Taking on a whole new property can be a very intimidating thing, especially in times of economic and financial uncertainty. So to reduce a bit of the risk associated with buying something new while still getting a little experience in the real estate world, Arielle O’Shea, a contributor to NerdWallet.com, suggests that you consider starting a bit smaller by doing short-term rentals.
Depending on what kind of property you already have, you could start by renting out a room in your home or some storage space you’re not using. You could also consider renting out some of your current property to travelers or other guests. Going this route at first could help you realize what it takes to be in real estate investing, especially if you’re planning on being a landlord now or in the future
Choose A Property That Will Increase In Value
Once you’re ready to purchase a new property that you’ll hold as a real estate investment, the biggest decision you’ll make is what exact piece of property you should purchase.
When looking at your options, Greg Herlean, a contributor to Forbes.com, shares that you should always look at a property in terms of how much growth it offers for having a big payoff down the road. Ideally, you should look for a property that will be valued much higher if you put in a little time and renovation effort or in an up-and-coming area.
Protect Your Personal Finances
As with all investments, there’s always a chance that you could lose money rather than make money when investing in real estate. But luckily, there are a few ways you can protect yourself as well.
To do this, Joshua Kennon, a contributor to The Balance, advises that you buy property as a separate legal entity to yourself, like as an LLC. This will ensure that, if you start to lose money on your investment, your personal finances will be more protected than if you just invested as yourself. But because this process can be a little complicated, it’s recommended to work with a real estate attorney to figure out the best option for you.
If you’re thinking about branching out into real estate investing, consider using the tips mentioned above to help you get started.
