So, you’ve decided to take the plunge or at least thinking about real estate investing. I commend you for that. Before we get into real estate investing on a budget. Let’s talk about why investing in real estate is one of the best investments you can make with your money.
- It’s not as volatile as say the stock market. Meaning you’re not going to lose your shirt in 30 seconds.
- Real estate appreciates over time, therefore your investment will likely increase.
- There is usually a 10-year cycle for real estate. Every 10 years the market goes from it’s peak all the way back down to the bottom. So, you know when this is going to happen, which allows you to capitalize on the real estate market at it’s highest point.
- Robert Kiyosaki’s wealth is mostly comprised of real estate investing.
- Your guaranteed to make money, provided you can do simple math and a little research. More specifically if you buy a multi-family unit to rent out the entire property you’ll make money every month. A form of passive income really.
Now, we can continue going on as to why investing in real estate is such a great investment, but let’s stick with what this article is about.
I am including an infographic below as well in the event you don’t want to read all 6 things. This will allow you to scan through even fast to get the gist of this article in 30 seconds.
Sound like a plan?
Real Estate Investing On A Budget And The 6 Things Every Investor Needs To Know
- Start small. What do you mean by that? Invest in a condo. See how it goes. Get a feel for the whole process from finding a property, to getting approved for financing, doing any renovations, and either flipping it for a profit or renting the condo out to a respective tenant for monthly cash flow. Most importantly, independent of whether you’re going to flip or rent it out it will not take as much cash to make that happen. Why? Condos cost a lot less that any other piece of real estate in which you can invest in.
- Invest in real estate within your current town. This is very important, especially when you’re on a budget. By staying in the town in which you live in you will not be spending money on gas, possibly tolls, and wear and tear on your vehicle (even though you can write off your mileage). Also, this will save you a ton of time. Time is money. Not to mention if you’re going to rent this particular property out to a tenant, you’ll need to go there from time-to-time to fix things that are broken. Makes a lot of sense to have that property in the same town you live in.
- Do not hire a real estate agent to rent out the property. Being on a budget, you can not afford to hire a real estate agent to screen tenants and rent out the property for you. So, here’s what you do and I do this all of the time for my properties. First, go through and see how ads are put together for rental properties on craigslist.com and make up an ad for your property. This will cost you $0. Second, within that ad say you’re having an Open House on a Saturday or Sunday for a 2 to 3 hour window (i.e. Open House from 12:00 p.m. to 2:00 p.m.). Chances are you will rent your property out in that 2 to 3 hour window. Do not set up individual appointments as that is a waste of your time. Do it all in one shot at an Open House.
- Get creative. This means trying to buy with no credit, no money, or nothing down. This is what we term creative real estate investing. And you definitely need to get creative, if you’re on a budget. Click here to learn how to invest with no credit.
- Do as much as you can on your own. This may sound like a no-brainer, but there are a ton of people that get into real estate investing, especially on a budget and are going to have someone do everything for them. The math simply won’t work this way. To be clear here, doing as much as you can on your own has to do with physical repairs – any demo work, remodeling, flooring, sheetrock, plastering, painting, you name it. The more of this you can do on your own the better.
- Salvage as much as you can. What do you mean by that? Let’s say the condo you’re buying needs a new sink and counter top, but the cabinets are in good shape, but just need to be refinished or repainted. Refinish or repaint the cabinets and replace the sink and counter top. This will save an enormous amount of money. Also, if a bathroom needs a new faucet, but the sink and vanity are fine, just replace the faucet. Don’t replace the sink and vanity. Save as much of the existing kitchens, and baths as you can. This is so important as the kitchens and bathrooms are the most expensive to fix/repair, but add the most to your rental/sale value.
That’ll do it for the 6 things to know about real estate investing on a budget.
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