Mark Twain famously advised, “Buy land, they’re not making it anymore.” For most of modern history, this has been sage advice. Now, more than ever, following this advice can often lead to big investment returns.
The stock market has seen a nine-year run up. Many experts expect a correction. Cryptocurrency has been hot, but it’s speculative and risky. Bitcoin and its brethren are no place to park money you are counting on for the future. What if you want more safety but a decent, predictable return?
Real estate investing provides the perfect solution. It provides real returns without the risk of a chunk of your cash disappearing overnight. However, many potential investors fail to realize that you can get started in real estate with as little as a few hundred dollars.
As noted in an article on Penny Hoarder, real estate starter portfolios, such as the Fundrise Starter Portfolio, have investment minimums of just $500, at a time. Investors buy shares of a diverse real estate portfolio that encompasses rental properties, land investments, commercial real estate, and other large projects. Investors have access to a dashboard that shows the properties they are invested in and their performance. The Fundrise Starter Portfolio pays a quarterly dividend and enjoyed an 11.44 percent gain in 2017.
For small investors who want direct ownership, raw land offers big opportunities. The price is generally cheap, and so is the ongoing costs of ownership, as explained by Fortune Builders writer JD Esajian. Property taxes can be as little as $100 per year. You are free to develop the land or sell it at a profit. Many raw land deals can be funded with just a few thousand dollars or less. Buyers should always beware if the land comes with any covenants or restrictions and consider only buying land unencumbered by a homeowners’ association. For example, a neighborhood association could restrict certain types of development or require development by a certain date. They can also prevent you from selling your land or force you to sell it.
Those enjoy being hands-on do well with fix-and-flip investment properties. Many lenders provide loans based on the after repaired value, which, if you find the right property, can mean $0 down and even cash in your pocket to fund the improvements. If being this hands on doesn’t interest you, you can get in on the lending side. Many private lenders are seeking investors with investment minimums of just a few thousand.
House-flipping has become a trendy and exciting career for many hungry professionals looking to establish themselves in the housing/real estate market. But in an attempt to chase after a truly promising career, far too many people repeat the same mistakes.
To help remedy the recurring problems that come along with house-flipping, below are two all too common pitfalls that seem to perpetually plague real estate moguls longing to turn a passion into a paid project.
What is Flipping?
First, we need to establish what constitutes “house-flipping” in the first place. “Flipping” is a type of real estate strategy in which the buyer purchases a house for the sole purpose of renovating and selling the property. The way that profit is made in this business is by purchasing low and selling high.
For instance, investors who flip properties might buy a property in an especially “hot” market, renovate it, and then sell it at a price that makes sense with its newly added, state-of-the-art upgrades. This is also where the true work comes in, too. House-flipping doesn’t just require smart investment purchases, it also requires home renovation and remodeling skill.
Mistake #1: Poor Time-Management
Renovating and flipping can often be a time-consuming business. Not only do you need to find a property, but you have to have enough time built into your project to account for inspections. After that, of course, you need to play the waiting game that comes along with listing. It takes a lot of confidence in your skill to be patient through this whole process, especially if your goal is to make enough money to at least break even.
Mistake #2: Not Enough Skills
House-flipping isn’t easy, and the competition is certainly present. Many skilled plumbers and carpenters often flip houses as a side project. If you desire to excel in the industry, there’s a lot more to it than buying low, taking a sledgehammer to the bathroom, and listing it on the market. Like it or not, the real money in the house-flipping industry comes from what the professionals call sweat equity. If you’re comfortable (and skilled) with a hammer, hanging drywall, and laying a carpet, then you just may have what it takes to make it in the house-flipping industry.
In the end, patience and hard-work are equally as important as any other skill in the house-flipping industry. If house-flipping is a passion of yours, then going into the industry with research and guidance is imperative. It won’t be easy, but with the dedication needed to accomplish the task at hand, house-flipping and renovation can be a great career full of excitement and fulfillment.