Are you thinking of dipping your toes into real estate? Real estate investing for beginners boils down to two methods: direct investing and indirect investing. Direct investing usually requires daily management of the property. Indirect investing involves real estate stocks and a hands-off approach.
This article will show you different ways of investing in real estate with little money. Let's explore.
Buy Real Estate REITs
Real Estate Investment Trusts (REITs) allow you to invest in real estate without owning physical property. Rather, you are investing in companies that own various types of properties, such as office buildings or retail stores.
To buy REITs, you need a brokerage account. The main draw of REITs is the high dividends yielded to investors. Buying REITs are among the best real estate stocks due to long-term gains. With that, they come with some risks, such as:
• Taxation: Since the government classifies REIT dividends as standard income, you could face a hefty tax bill.
• Lack of Diversification: Many REITs concentrate on a single property type, depriving investors of a diversified portfolio. Therefore, choose several REITs that focus on different properties.
• Interest Rate Fluctuations: REITs are sensitive to interest rate changes. Rising interest rates have a negative impact on REITs.
Despite the cons, REITs provide a faster route to real estate investing. Best of all, REITs provide fast liquidity.
Become A Landlord
If you prefer the direct approach, you can learn about real estate by owning it directly. Becoming a landlord involves the following steps:
1. Determine if the prospective property will produce adequate cashflow
2. Set aside enough money to purchase a property (or obtain a mortgage)
3. Save additional money for unforeseen costs (i.e. repairs or maintenance)
4. Read all landlord-tenant laws
5. Secure landlord insurance
6. Renovate the property as necessary
To become a landlord, you must have the patience to deal with tenants regularly. Moreover, the properties come with ongoing commitments in the form of insurance, maintenance, and repairs.
Become a landlord only if you intend to commit to the role full-time. If you want to buy real estate, read this article for more information.
Choose REIGs
Real Estate Investment Groups (REIGs) give you access to rental properties without owning them. They invest in rental properties, and they are similar to mutual funds. Under an REIG, you are buying a property from a company that constructs the units.
Buying the properties makes you part of the investment group. You own the properties, and the builder manages the property (i.e. maintenance, repairs, etc.)
This is a great option if you want to own a rental property without becoming mired in management duties. You can also own several properties within the group. With that, take note of the cons:
• Fees: Since REIGs are similar to mutual funds, they also have the same fee structure.
• Vacancy Risk: You may lose income if the units remain unoccupied for extended periods.
• Less Transparency: Many REIGs are private; therefore, you may encounter shady companies looking to rip off investors.
The best way to avoid scams and hassles is to research the reputation of the company.
Real Estate Investing For Beginners
What Else Should I Know? When it comes to real estate investing for beginners, the best advice is to know what works best for you. If you don't have time to manage properties, consider REITs or REIGs. If you want to learn real estate directly, you can become a landlord. Visit the Real Estate section of the Frugal Finance Blog to learn more about land investments and property investing today.
Being a property owner is one of the best financial moves you can make in the world of entrepreneurship. As long as you keep the home updated and maintained, there will always be a market in this industry. In fact, 40% of renters say they never intend to buy a home.
However, just because there is a market out there for you, it doesn't mean people will come flocking to your rental. You need to learn how to advertise your home for rent and attract the right renters. You need to master the art of rental property marketing.
We are here to get you started with profitable rental properties. Check out our top seven tips to help you rent your property fast.
1. Know Your Target Audience
Effective rental property marketing demands insight into the ideal renter for your home. This can be based on rent, size, location, community, and more. For example, you wouldn't want to market a four-bedroom home to a single bachelor.
Once you have defined your target audience, you need to write an enticing description of the property to post throughout various marketing platforms. Highlight the important features that will grab the attention of potential renters, such as:
• Updated kitchen/bathroom
• Number of bedrooms/bathrooms
• Utilities paid
• Proximity to parks
• School districts
• Garage parking
• Etc.
Obviously, this list will change based on the type of tenant you are trying to attract. If you are looking for families, focus on the safety of the community, the local school districts, and nearby parks or playgrounds. If you are looking for single renters, be sure to highlight the proximity to town, paid utilities, and lower rental rates.
2. Use Social Media
Social media is one of your biggest assets for rental property marketing. Nearly 70% of American adults are on Facebook. The best part is, you have the option of both free and paid advertising.
Even if you don't have a rental company, you can advertise your rental through organic social media. Simply use your personal profile and share the rental home with your friends and followers. Request that they also share it to expand your influence on their audiences.
You can also get onto community pages where people can buy, sell, trade, and share information. Post your rental here (assuming the page allows it) for thousands of members of the community to see.
If you have a business page on Facebook, you can boost your posts and pay for greater exposure. Facebook ads allow you to target a specific demographic of people based on location, age, gender, and more. This can be helpful for finding the ideal tenants for your home.
3. Advertise In The Local Newspaper
Even though social media has largely taken over the way people get their news, newspapers are still quite popular. Partially, this is because most newspapers have kept up with the times and publish their content online. They also have profiles on social media that people can follow.
By taking out an ad in your local newspaper to be printed and published online, you can reach a lot of readers. You can post it in the classified section relatively inexpensively for weeks at a time.
4. Take Quality Photos
Whether you're using a website, flyers, or social media, you must take quality photos of your rental home. As a society, we've gotten pretty spoiled with the internet and online shopping. It's convenient, but it's made us all a little lazy.
While most people will eventually take a tour of a home they plan to rent or buy, the first thing they'll do is look at the online photos. This "virtual tour" can literally be the deciding factor on whether or not you get any calls about your property.
If you have the ability and equipment necessary, you can take the photos yourself. However, it may be worth it to hire a professional to take a few dozen stock photos you can use indefinitely.
5. Plan Ahead
When learning how to market a rental property, it's important to think about things in advance. For example, most rental units require at least a 30-day notice from tenants planning to vacate the property. As the property owner, the second you receive this information, you need to start creating interest in that unit.
Use the stock photos you already have to start advertising the home on social media. Just make sure you post when it will become available as well.
This can be a great rental property marketing tactic to avoid lapses in renters. You can pre-screen applicants and get deposits in advance to make the transition as smooth as possible.
6. Put Up Signs On The Property
One of the most common marketing ideas for apartments or rental homes is using signs on the property. This is great for advertising to people in the neighborhood, pedestrians, and drive-by traffic.
Signs are incredibly affordable. You can buy customized rental signs online or buy generic ones from your local hardware store.
It's also a good idea to place flyers or pamphlets under the rental sign with information about the property. People walking or driving by can stop and get immediate information about the size of the home, rent, number of rooms and bathrooms, and anything else worth noting.
7. Use A Professional Service
Finally, consider using paid property management marketing ideas. There are listing agencies out there designed to help property owners like you find a tenant as quickly as possible.
You can list your home through their website. There, potential renters can find your property, look at the description, and even apply online. Some of these property management companies offer extra services, such as rental analyses and eviction services.
Looking For More Rental Property Marketing Tips And Other Homeownership Advice?
Being a successful property owner takes more than simply knowing your way around rental property marketing. You also need to know how to manage your finances, keep your home stylish, make repairs and updates, and more. Our blog is dedicated to helping homeowners perfect their properties, whether for private use or for renting.
Before you go, be sure to check out some of our other articles for everything on cleaning tips to staging advice. Visit the Real Estate section of the Bootstrap Business Blog to learn more about rental income properties, property marketing tips, and much more.
