Beginner's Guide to Real Estate Investing
First Things First:
This guide is meant to be a starting place for anyone who is interested in “buy and hold” residential real estate investing; in other words, purchasing a home and renting it to someone else.
There are many other ways to invest in real estate (commercial, industrial, retail, REITS, etc.), but this article would quickly transform into a very thick book if we attempted to get into the details of all of them. For now, we are going to keep it simple: buying a home with the purpose of renting.
(If you are looking to get into any of the other channels of real estate investing, stop here and contact us.)
Why buy a home and rent it to someone else?
If you have been a renter at any point in your life, as most of us have, you have probably experienced firsthand that rent is always on the rise. Nearly every time a lease is renewed, the rent rate increases at least a little bit. On the other hand, if you have owned a home or researched home-ownership, you know that a mortgage has a fixed monthly payment that doesn’t change at all, even if it takes 15-30 years to pay the loan off.
Considering that in most markets, the average monthly rent is higher than the average monthly mortgage payment, a homeowner can easily make a profit off of renting that home; even if they are still paying off their mortgage. Heck, someone could even buy a home, rent it out, and have the renter effectively paying their mortgage the entire time until iit is fully paid off. Everything they earn after that point is extra income.
If renting out one home can be an excellent source of passive income, imagine renting out several homes. This could potentially subsidize or replace full-time employment, which is what makes real estate investing is so appealing to many people.
So let’s get into it: how do you start investing in real estate?
Before you quit your day job to pursue real estate investing, realize that although it can be highly profitable, this is not a get-rich-quick scheme. You are going to need to put in serious effort if you want to get serious results. Just like the life event of buying your own home, buying an investment property could turn out to be quite the climb; but we Sherpas will be there to guide you every step of the way.