A “101” Guide to Real Estate Investing for Beginners

Investing in real estate can provide numerous financial benefits, and is a great way to build a nest egg. Using research tools, such as books and blogs, and asking real estate professionals for advice, beginners can learn to invest and profit from real estate.

Why Invest in Real Estate?

Real estate investing provides personal control over wealth along with opportunities for appreciation, cash flow, leverage, depreciation and income. Another way to increase value on your investment is by earning sweat equity and fixing up the property yourself, an option unavailable with paper money investments.

How to Get into Real Estate

When you begin the process of real estate investment, first identify your goals. If you need assistance, professional partners can answer your questions. A financial planner or advisor can help you with the first step of determining your readiness as well as a financial plan. A real estate agent with experience in real estate investment properties can also be a big help. Look for someone with commercial experience, or contact a commercial brokerage. Commercial real estate brokers are trained to assist in analyzing commercial real estate investments.

Another way to get into real estate is by joining a real estate investment group. These groups make the decisions for you with your input, and invest your money into a pool with other people. Although note that real estate investment groups, also known as private equity groups, traditionally require investors to be accredited. An easy option to get started could be to invest in HappyNest with as little as $10.

How to Choose the Right Real Estate Investment

Consider your goals when planning your real estate investment. Questions to ask yourself include these:

  • What is the term of the lease?

  • How much can you invest?

  • Is the real estate located in a high quality market?

Types of Real Estate Investments

Both residential and commercial real estate can be used for investment. On the residential side, owning as home can be considered an investment, especially if you buy in a rapidly growing market. The appreciation will pay off when you sell. Also, residential homes can be used for short term rentals, via agencies like Airbnb and Homeaway. Some homeowners have opted to purchase a home with a basement apartment or mother-in-law unit that can be rented out for short-term rentals or long-term leases.

Other commercial investments include both residential and commercial properties. Residential real estate means homes and condos and buildings zoned as residential, while commercial property can include apartment buildings, multiplexes, office buildings, industrial buildings, manufacturing space, and income producing properties such as parking lots or retail venues. Another way to invest is by putting money into an exchange traded fund, or ETF. This is a fund that invests in stocks issued by real estate trusts, or REITS.

Whatever you decide, owning the property and the entrepreneurial aspect of real estate investing can be lucrative, stimulating and even fun.

This article was written by Melanie Grimes. Melanie has been a writer, blogger, and real estate professional for over 20 years. She writes for various websites on real estate, travel, and health. Grimes attended Barnard College, Bastyr University, and Western Washington University with degrees in English and Communications.

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