Not everybody knows how to get started in real estate, much less how to choose a beginner-friendly investment. So, what is the best property investment for beginners after all?
Sure enough, there isn’t one answer to this question. In fact, there are a few property investment strategies that we would strongly suggest for every beginner real estate investor out there. We chose those that provide the best financing options as well as ones that come with the least risk.
Property investment for beginners: Traditional rental properties
When it comes to income generating assets, traditional rental properties are at the top of our list. Traditional rentals are one of the best types of real estate investments when:
1) You want easy financing because you can always apply for a mortgage and let the property pay for itself.
2) When you want to be a passive investor, meaning that you can rent your property and hire a property manager to take care of tasks so that you guarantee the minimum involvement.
3) You want the stable monthly rental income that comes with it.
However, there are things you must take into account. The whole investment depends on cash flow. In other words, it is the money you get to keep after deducting the rental expenses from the rental income. In general, these are called positive cash flow properties. One way to ensure these properties actually generate a positive cash flow is by using the investment property calculator. It basically performs both the rental property analysis as well as the real estate market analysis to ensure that the property in addition to the location is a profitable combination overall.
Property investment for beginners: Airbnb rental properties
When it comes to real estate investing for beginners, there is no better option than Airbnb rental properties. A vacation home is another form of income generating assets. You basically target travelers, vacationers and other people who are interested in a cheap, short stay.
Moreover, if you are interested in finding the best places to invest in Airbnb around the US, you can check out Mashvisor’s heatmap. It starts with a location of your choice and the rest is our job. We will provide you with the details and full data on the location as well as the number of listings, Airbnb properties, CoC return measures and cap rate measures.
Airbnb rental properties are also low-risk and easy to finance, thus, making for the best property investment combination for beginner investors.
Property investment for beginners: Wholesaling properties
Wholesaling is one answer we could give you if you are wondering how to make money in real estate. Truth is, it is one of the best real estate investments finance-wise and risk-wise. Simply what it means is that you find distressed properties for sale. The owners of these properties are mostly motivated and are selling due to the property’s condition as well as financial problems. So, what you do is assign that property to a contract for a certain price that is lower than the market price. Then you find a buyer who is willing to buy it for a slightly higher price. Once you close the deal, your share is the difference in the contract price and the actual price the buyer has paid.
The biggest advantage of this particular strategy is that you don’t even need much money to invest. You are not buying the property, rather you are mediating to sell it. So, you might end up investing as little as a few hundred bucks in return for a few thousand.
Sounds like a good deal, huh?! Now, click here to learn all about real estate wholesaling on our blog!
Property investment for beginners: Buy and hold properties
Buy and hold real estate is perhaps the most traditional and safe property investment for beginners. Once you buy a rental property, you hold on to it for a few years to appreciate. After a while, you sell it at a higher price. Meanwhile, you can rent it out and enjoy a win-win situation. You benefit from the rental income and the price difference when you sell it. But, there are cases when the property depreciates. In other words, its value drops and the real estate investor ends up at a loss. To prevent that, read our blog “Natural vs. Forced Appreciation in Real Estate Investing.”
Property investment for beginners: Property investing partnership
When you are lacking in expertise, there is no better option than co-investing. Finding a real estate partner is the best way to always compensate for what you are lacking. It helps a beginner real estate investor to start with higher risk investments and diversify his/her real estate investing portfolio. Of course, when investing with a partner, you can step into more complicated investment strategies such as fix-and-flips. These strategies hold higher risks even though they are more rewarding on a financial level.
Bottom line, partnering up gives a beginner the access to the best real estate investments. But, finding the right business partner is a process. Therefore, you really need to think it through to make sure you avoid any problems arising from a partnership.
Click here to read more about real estate partnerships.
The best property investment for beginners comes with the right education. Reading, training, and hanging out with other successful real estate investors are great. But, what if we tell you that the right resources are also important? That’s why we’ve put together the best real estate blogs and the best real estate investment tools for every real estate investor. We offer predictive analytics in addition to a heatmap for finding profitable investments in the business.
Try out Mashvisor’s investment property calculator for the most accurate return on investment calculations. We guarantee they will be of great assistance in finding the most rewarding investments out there. Sign up if you haven’t already and start your journey to financial freedom alongside us!