Building wealth with real estate can be achieved through various strategies. In fact, few ventures can offer the same level of flexibility as real estate investing. In this article, we will introduce you to a few of these strategies and show you how to create wealth investing in real estate.
How to Create Wealth Investing in Real Estate: 5 Effective Ways
Making money in real estate has never been easier. The housing market is very strong at the moment and the emergence of several real estate investing tools has streamlined the process of market research and investment property analysis. Now is the best time to invest in real estate! Here are some of the most effective ways to create wealth investing in real estate.
1- Focus on up and coming areas
Buying investment property in an up and coming location is the simplest way to create wealth investing in real estate. These housing markets allow you to ride the growth wave and generate a massive return on your initial investment. To identify these areas, factor in these characteristics when you are looking for an income property:
- An up and coming area will often have a disproportionate number of young residents.
- Growing real estate markets should have experienced a steady increase in property construction over the past recent years.
- Indicators such as employment rate and overall economic output should be trending upwards.
2- Invest in multiple rental properties
If you want to create wealth investing in real estate, then you should seriously consider buying multiple rental properties. In fact, this might be the most effective way to create multiple income streams and build up a significant amount of wealth within a short period of time. Moreover, investing in more than one income property helps spread out the risk between various assets and limits your exposure to unpredictable market movements. Here are some of the best practices that you need to keep in mind when investing in multiple rental properties:
- Build a mixed portfolio that consists of more than just one type of investment property.
- Explore non-conventional financing options that can offer you favorable terms.
- Avoid overusing leverage in real estate.
- Retain the services of a professional property management company.
3- Invest in multi family homes
Much like acquiring multiple rental properties, multi family real estate investing is a great way to generate high rental income. Furthermore, managing multi family homes is fairly easy compared to operating multiple separate properties. Other advantages of these real estate investments include a lower acquisition cost, a myriad of tax deductions, and a higher appreciation rate. Needless to say, real estate investors who opt for this approach can build their portfolio in a steady and reliable manner.
Creating wealth investing in real estate starts with being able to identify the top-performing investment properties in any market. This is why you should consider using a specialized and highly advanced tool in your property search. Luckily, you don’t have to look that far to find such a tool. In fact, Mashvisor puts at your disposal the best real estate search engine- the Property Finder. By employing a combination of AI technology and machine learning algorithms, this powerful tool can help you find the perfect multi family investment with a high ROI in a matter of minutes.
4- Employ a house hacking strategy
House hacking is a strategy that continues to gain traction among real estate investors. This is mostly due to its simplicity as well as the dual benefit that it offers. In simple terms, house hacking refers to investing in a multi family property, living in one of its units, and renting out the rest to other tenants. This strategy is a great way to get into real estate investing since it subsidizes your own living expenses and enables you to learn the ropes of property management. When you house hack, you are essentially building your equity for free and covering all your expenses at the same time.
Financing is another factor that makes house hacking a viable option for wealth creation. In fact, using this strategy allows you to qualify for FHA loans. These are government-insured mortgages that offer highly favorable terms as well as low down payment requirements.
Related: Is House Hacking Worth It?
5- Implement a fix and flip real estate strategy
Fixing and flipping investment properties is another wealth creation route that you should consider. As long as you do your due diligence and get your investment property analysis right, the upside you stand to gain can be sizable. Having said that, this might not be the ideal option for a beginner real estate investor. Several things can go wrong when buying distressed property and costs can slowly snowball into a huge financial outlay. If you still want to try your hand at fix & flip, make sure to assemble a qualified team of professionals to assist you. Working with a real estate agent who specializes in these investments is also advisable.
Best Practices to Keep in Mind When Investing in Real Estate
Profitable real estate investment requires avoiding several pitfalls. This is especially the case when you are trying to build wealth over a long period of time. Here are some best practices that should help you navigate the housing market with ease:
- Research every aspect of a particular market before investing. Put a special focus on the strength of the economy, the diversity of the job market, and the demographic trends in the area.
- Explore all your financing options and shop around before opting for a specific loan.
- Take a conservative approach to the real estate market and avoid investments that look like potential money pits. The investment property calculator can help you achieve this by providing you with accurate ROI and expense estimates. Sign up for Mashvisor now to give it a try.
The Bottom Line
Investing in the housing market is without a doubt one of the most effective wealth creation instruments that you could use. The high-income potential coupled with the wide range of profitable strategies makes real estate investing the perfect option for ambitious and goal-driven individuals.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.