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- I want to start investing in real estate, but I don’t have much disposable income.
- My financial planner told me to consider house hacking or REITs.
- He also mentioned crowdfunding and warned me to start slowly.
At the end of 2023, I wrote down a list of things I wanted to do in 2024. One of its main goals was to eventually invest in real estate. My investment portfolio is full of stocks, mutual funds, and index funds. I wanted to start diversifying with different types of investments.
But I wasn’t a millionaire or someone with a lot of disposable income, so I met with a certified financial planner. Jordan Lehman To find out some ways you can realistically invest in real estate based on your current financial situation.
Before we begin, Lehman told me to not only take a close look at my financial situation, but also to understand market trends before I start investing in real estate. “Make sure you have financial stability and a solid foundation,” he said. “Understand what your cash flow will look like if real estate investment expenses can be added.”
He then suggested that I take the time to research the real estate market and local trends to determine my personal risk tolerance. “If you decide to buy real estate, are you prepared for potential fluctuations and unexpected expenses in real estate?” he asked.
I assessed my finances and shared that I have no debt and an emergency fund. I also started diving into resources like real estate investing books and personal finance podcasts to learn more before deciding how to spend my money.
We then began discussing three potential real estate investment options. This is what Lehman recommended.
1. Buy an investment property or rent your current space
The first option he shared was to buy a house for my family to live in and rent out rooms to earn additional income.
“This will help you understand what tenant management is like and see if you are interested in investing in rentable property,” he said.
He also recommended a concept called house hacking. This allows you to buy a multifamily property, live in one unit of it, rent out the others, and use the proceeds to pay your mortgage and build equity in the property.
“This year, mortgage companies announced “Lower down payments will be accepted for owner-occupied apartments at 5% instead of 15-25%. This will make investing in this type of property more affordable and accessible,” he said. It will be easier,” he said.
These options require more capital and involve greater financial risk. Additionally, as a current renter, I don’t know if I’m ready to buy a property yet. Instead, when I look for a larger apartment in 2024, I plan to find one where the management company will allow me to sublet her room or the entire apartment while I travel. That way you can earn some extra cash.
Check it out today average mortgage interest rate And learn more about how much home you can buy.
2. Buy a real estate investment trust
I wasn’t ready to buy real estate, so Lehman offered me an option that required less risk and capital. He mentioned purchasing real estate investment trusts (REITs), which are companies that own or finance income-generating properties.
“If you choose this option, you don’t need to know anything about real estate investing or have the necessary funds to purchase a property,” he says. “But you can still be exposed to real estate.”
I had heard about REITs for some time and decided they would be at the top of my investment list. After weeks of researching what I wanted to buy and seeking advice from a financial advisor, I was able to invest several thousand dollars. Through my brokerage account he invests one or two dollars in REITs.
3. Invest in real estate crowdfunding opportunities
I was interested in buying REITs, but wanted to find another opportunity to try in 2024. Lehman said crowdfunding through real estate investment apps is a way to directly invest in real estate projects without owning the property outright yourself.
“By contributing capital to a pooled real estate fund that owns physical real estate, you could make monthly or quarterly income distributions,” he said. “This could be a good way to become a real estate investor without investing directly in real estate yourself. Instead, you’ll be contributing money to a fund.”
Yieldstreet is one of them. best real estate investment app For those interested in real estate and alternative investments.read our article Yield Street Review For more information.
I have decided that this is the option I want to move forward with in 2024. I started looking into opportunities with platforms such as: cloud street and Fundraising activities. I also started chatting with people who had made these types of investments within Reddit forums and Facebook groups to learn about their experiences.
Investing in real estate is a goal I want to achieve by the end of 2024, but Lehman doesn’t think it should be a hard deadline.
“Real estate investing is all the rage right now,” he told me. “When you open social media, you hear people saying they’ve made millions in real estate. But as a new investor, start slowly and small. You’re never told you have to make a big investment right away. Don’t give in to pressure.”
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