When done right, real estate investing can be a very lucrative and reliable way to diversify your investment portfolio, make a decent income, and grow your wealth.
Real estate prices have been rising over the last few decades, which spells good news for potential real estate investors. There are also many real estate investment opportunities, each with potential benefits and risks. However, many new investors have trouble deciding where to begin. If you are wondering how to start investing in real estate in 2020, this blog is for you. Here are some of the best real estate opportunities to go after right now.
1. Traditional Rentals
One of the best real estate investment opportunities to consider in 2020 is investing in traditional rentals. Purchasing residential real estate and renting it out for long periods is a great way to generate consistent monthly cash flow year-round.
With the increase in population, the market for residential real estate is growing, especially multifamily homes. However, the downside to purchasing long-term rental properties is that they usually require a lot of cash upfront. You will not only be required to pay a down payment of at least 20% but you’ll also need to be prepared for unexpected costs. You should always analyze the potential return on investment of a traditional real estate investment to know if it’s worth it. You can do an in-depth real estate market analysis and investment property analysis using Mashvisor’s real estate investment tools.
Here are some of the best places to invest in traditional rentals in the US real estate market in 2020:
- Austin
- Raleigh-Durham
- Nashville
- Charlotte
- Boston
- Dallas-Fort Worth
- Orlando
- Atlanta
- Los Angeles
- Seattle
Also, make sure you screen tenants before you let them in to prevent problems associated with having bad tenants. If you don’t want to be actively involved in managerial duties, you can hire professional property management to oversee your traditional rental investment.
2. Airbnb Rentals
Airbnb rental properties are one of the biggest opportunities in real estate right now. You can rent out a room or an entire house for short periods via platforms like Airbnb. Investing in short-term rental properties has a number of benefits.
If you have a spare room, investing in Airbnb is a good way to get into real estate. It can be a great way to have a feel of what it takes to be a landlord without having to make a huge financial investment. Generally, in a good area, Airbnb rental properties tend to bring more rental income than long-term rentals. Since you rent the property for short periods of time, you can constantly check on its condition and be proactive in your maintenance.
Note that Airbnb rental properties rely heavily on location. The real estate market you invest in should be close to tourism sites. Also, ensure that you market the rental property well, take good professional photos, add an attractive description to the listing, and maintain good reviews. These factors will help you maintain a high Airbnb occupancy rate all year round.
Here are some of the best cities for Airbnb investment in the United States:
- Milwaukee, WI
- Eugene, OR
- Cape Canaveral, FL
Learn Why Here: What Will 2020 Look Like for Airbnb Real Estate Investing?
However, there are some potential disadvantages to owning an Airbnb investment. Managing Airbnb rental properties is more involved than long-term rental properties. Hiring a property manager is usually more expensive. There might also be unfavorable Airbnb regulations that can hinder your real estate investment.
3. House Flipping
House flipping is also one of the best real estate opportunities to go after in 2020. It involves buying a home below market value, renovating it as cheaply as possible to increase its value, and then reselling it for profit. When done right, this real estate investment strategy can be very rewarding.
However, it is not as easy as portrayed on TV. It is a bit risky. You can easily lose money if you don’t accurately estimate the cost of repairs, something that is not easy to do. The investment property should also be sold as fast as possible since you will be paying for a loan without receiving any income.
Bear in mind that, due to the cost of doing the renovations, you will need funds beyond the initial investment. Do your due diligence and have a plan before you begin flipping houses.
Related: First Steps to Take When You Buy a House to Flip
4. REITs (Real Estate Investment Trusts)
If you are looking for the best real estate opportunities to go after right now, you can also consider buying REITs. A REIT is a fund that invests in real estate projects. Investors contribute money towards a larger real estate portfolio and are paid dividends.
This is a great real estate investment strategy if you are strapped in time and want to be a passive investor. They are an inexpensive and fast way to invest in real estate. You don’t need a ton of money to invest in one, which makes it a good entry point for first-time investors. Generally, REITs have higher dividend yields than stocks. This makes them a good investment for retirement.
However, these real estate investment opportunities can be varied and complex. They may invest in property, mortgages, or both (hybrid). To find one that is best for you, you have to do your research well.
Related: What Is a Real Estate Investment Trust (REIT)?
The Bottom Line
There are many real estate opportunities you can go after in 2020. However, the best real estate investments for you will depend on your situation. Consider how much money you are willing to invest, the amount of time you have and whether you want to be actively involved in the management of your investment. Do what feels right for you. However, real estate investing is a little more complicated than investing in stocks or mutual funds. Therefore, it’s important that you do your due diligence before you make a new real estate investment. Mashvisor’s blog is a good place to learn more about real estate investing.
Also, be sure to use Mashvisor’s real estate investment tools when analyzing traditional or Airbnb investment properties in the US housing market 2020. With our tools, you will be able to find the best places to invest in real estate and the best investment properties for sale.