Investing In Real Estate: How To Start And How Much Money You Need

When talking about investing in real estate, we receive a lot of emails and comments from readers interested in knowing how to invest in real estate. Investing in property and real estate can make you a lot of money, but only if you know what you are doing. For this reason, we have prepared a guide in which we show you how to invest in real estate: how much money you need, how to start, and how to succeed.

How to invest in Real Estate and earn money with real estate

To be able to invest in real estate you must start by investing in the most important thing: investing in your education. There are different ways to invest in property and real estate, so you must have a clear idea of your goals and what you want to invest in.

It does not matter if you want to invest in real estate in the United States, or if you want to buy properties in New York, Miami, or other countries, in this guide we will show you how you can achieve it and what are the best ways to invest in real estate.

What is real estate?

Real Estate is another term used for real estate. This term is used to describe all real estate consisting of land and the buildings on it.

Although we commonly think that the real estate or real estate market is made up of houses and buildings, this term includes residential, commercial, and industrial real estate that is sold by a real estate agent.

Examples of real estate include:

undeveloped land
Residential real estate: houses, apartments, condominiums.
Commercial real estate: Office buildings, warehouses, and store buildings
Industrial real estate: Factories, mines, and farms.

Why invest in real estate?

There are multiple reasons why you should invest in real estate. In fact, in recent years the number of investors in real estate and real estate have multiplied rapidly.

Some of the benefits of investing in real estate are:

Diversification – Investing in real estate and real estate is traditionally highly remunerated and presents an alternative to investing in shares or investing in the stock market.
Good return on your investment – a real estate investment portfolio allows you to obtain higher returns with less risk (compared to certain investments in the stock market or other markets).
Control of inflation – The returns when investing in real estate are directly linked to the rents and payments they receive from your tenants. Rent payments can be adjusted annually to keep up with inflation and have better control of your money.
Leverage – It is very common to start investing in real estate by requesting a home loan. This represents an opportunity to obtain great returns with little investment.

What do I need to invest in real estate?

It all depends on your goals when investing in real estate and how much money you want to earn with real estate. We have seen people have managed to earn money in real estate without having money and others have started with thousands of dollars to invest. Both have been successful.

We will analyze this point in depth later and we will show you how to start investing in real estate without money.

Can I invest in real estate without having money?

It is possible to invest in real estate without having money, the important thing is to know what to do. Even if you need more reasons to invest in property right now, there are many things you can do to prepare to buy a property.

However, you must understand that, although investing in real estate without money is possible, it will cost you more and you will have more work. You will also have to get out of your comfort zone and make possible changes in your life.

Yes, it is possible to invest in real estate without having money, but this requires more work and effort.

Many people love the idea of investing in real estate, but they never do it. To be one of the few to invest, you have to take action.

Steps to invest in real estate without losing money

Although no guide tells you step by step what property you should buy and how to make the most of your options, you can start to become a real estate investor by following these steps.

1. Start with yourself

It may seem that buying a property is simple, but buying a property involves a lot of work. This means that you should start with your best asset when investing in real estate: yourself.

Invest in books, seminars, and education programs. This will improve your knowledge and you will be able to get real estate investment ideas that will help you earn more money with your investments.

Some of the books on real estate that you must read are:

The ABCs of Real Estate Investing, by Ken McElroy
The ABCs of Property Management by Ken McElroy
How to Buy a Home For Dummies
Tax-Free Wealth, by Wheelwright
Concrete Dreams, by Jorge Pérez
Guide to Investing by Robert Kiyosaki
The successful path to Your Miami Property, by Katherina Santana
See the full list of recommended books

You should not rush to buy a property. Although you don’t need to be a real estate investing or real estate expert, to be successful you must always be willing to learn.

2. Visit the bank

Regardless of whether you want to start investing in real estate with no money or with money, you should think about financing the rental property you want to buy.

How to pay for the property is just as important as finding the property in the best condition, because if you can’t pay, you will lose your investment.

Start arranging your investment financing as soon as you begin your real estate education. Talk to your bank about how much you can buy and how much they will lend you.

This will give you a better idea of your budget when buying a property and will make your investment more profitable since you will be able to leverage your investment in real estate by combining your initial money with the money that the bank will lend you, which will ensure a better return.

3. Control your expenses

Once you have an idea about the type of property you want to invest in and the loan you can get, it’s time to control your expenses and minimize your expenses. Before you start investing in real estate, you must have a budget for your expenses and take advantage of opportunities to save money.

Buying a property generates expenses, so you must save money to be able to get the most out of your investment. Remember that you may have to use money in:

Fees at the time you purchase the property (known as “closing costs”)
possible repairs
Taxes
Maintenance
Advertising (if you want to rent or sell the property)

Keep a budget and control your expenses so you will have enough money to cover your investment.

4. Follow your plan and start visiting properties

After calculating your expenses and specific goals, it’s time to make and follow a plan. It’s best to write down your goals and periodically check that you’re sticking to them.

Remember that investing in real estate will be your business and should be treated as such, so your main objective will be to minimize expenses and maximize profits.

Visit sites like Zillow and explore recent sale prices and properties for sale in the area that interests you. This will give you an idea of how much to pay for your property, and the associated taxes, and give you plenty of time to shop for different options.

5, Meet other investors

Probably the best way to start investing in real estate is to learn from other local investors. Real Estate is a very competitive market, so do your best to meet other established investors.

Successful investors are proud of their accomplishments and like to brag about them, so it’s easy to strike up a conversation with them. Take advantage of open house events to meet more investors and learn from their experiences.

However, this does not mean that they will respond to your questions and requests. Try to learn something from every investor you talk to, but remember that your goal will be to establish a potential business relationship.

6. Buy your first property

Now comes the exciting part: the purchase of your property and your investment in real estate. This is the last of the steps to invest in real estate for a reason: it will be the base of your money.

Before buying a property you must make sure that you have all the knowledge and money necessary to succeed in achieving your goals, so let’s discuss the ways to invest in real estate so that you can have a better idea about what type of property to buy.

Ways to invest in real estate: How to make money

What are the best ways to invest in real estate? The answer will depend on your lifestyle, risk tolerance, your experience, the time you want to dedicate to your investment, and the type of property you want to buy.

1. Buy and sell properties

What does it consist of?: buy a property, live in it, and then sell it.
difficulty: easy
How much money do you need to start investing ?: Little

These are good long-term investments because of the constant additional income and the opportunity to start small. If you are looking for a long-term investment in real estate and make money from home, this method is perfect to make your money work for you.

To be successful in investing in real estate this way, start by doing your research on what area you would like to live in and consider how many people will want to live in this area when you sell the property.

This is the most common way to start investing in real estate without having a lot of money. You will be able to apply to the bank and buy a house and use the money you would pay in rent to accumulate your wealth. You can also rent a room and earn additional money.

If you want to invest on a larger scale, you can buy multi-family houses or apartments. The advantage of multi-family homes is that you generally spend less and earn more.

2. Buy houses and repair them

What does it consist of?: you buy a property in poor condition and repair it to make a profit
difficulty: medium
How much money do you need to start investing? Enough money to pay for repairs

Buying and repairing real estate can be a very lucrative way to invest in real estate, especially if you want to make money in the short term and quickly. Your main objective: buy properties, renovate them, and sell them.

It may sound easy, but one of the problems with this investment is the increasing competition. You should also be patient and inspect the property thoroughly to get a clear idea of any problems and repair costs.

When looking for a property to repair, you can focus on houses that the owners have lost due to not being able to pay for them (known in the United States as foreclosure ).

After setting an estimate, it’s crucial to consult an inspector and contractor to identify problems and avoid wasting time and money. When buying houses for repair, time is your greatest asset. The longer you take to repair the property, the more expenses you will have.

3. Leverage

What does it consist of?: investing in real estate with little money and using a loan to pay for a property
difficulty: medium
How much money do you need to start investing? Generally 20% of the value of the property you want to buy

Leverage increases returns when investing in real estate. If you own 20% of a property and take out a loan for the remaining 80%, you will receive rental income based on 100% of the property’s value, which amplifies your earnings.

For example, you buy a house worth $100,000 and collect $750 in monthly rent. Your mortgage payment is $500, including taxes. When you buy it, you make a profit of $250 a month with only a down payment of $20,000. This represents a profit of $3,000 per year or a 15% return on your deposit.

Also, leverage makes you benefit from the full sales price. For example, if that same $100,000 property you bought years ago sells for $120,000, you’ll get an additional $20,000 with just a down payment of $20,000.

You can get great returns by leveraging your investment in real estate

4. Passive Investments

What does it consist of?: buying real estate through investment funds
difficulty: easy
How much money do you need to start investing? You can open an account with a stock broker for less than $100.

Passive investing in real estate means not getting your hands dirty and giving your money to other people to handle. The most common way to do this is by investing in a real estate and real estate fund, known as a Real Estate Investment Trust ( REIT in English and SOCIMI in Spanish).

By investing in a REIT, you are part of a fund that invests in residential, commercial, and industrial real estate. It is common to see that these funds invest in condominiums, apartment buildings, shopping malls, and skyscrapers.

These passive investments generally have high returns and less risk. Also, by investing in an exchange-traded fund like the Vanguard REIT, you receive regular dividends.

Returns of an investment fund in Real Estate (in the last year):

Another way to passively invest in real estate is to lend your money to a real estate investor. Why wouldn’t an investor go to a bank? It is difficult to obtain a loan for a property that is vacant and in need of repair. However, this investment carries more risk.

5. Rent vacation rentals (with Airbnb )

What does it consist of?: renting a house or apartment in whole or in parts for a very short term
difficulty: easy
How much money do you need to start investing? Very little money if you already have the property

Vacation rentals or short-term rentals are another great way to make money with real estate, especially if you live in a city or near an attraction with a high level of tourism.

This way of investing is so rewarding that people are paying for their houses by only renting part of it for a few days a month and you can earn money using a site like Airbnb.

There has been an increase in the number of investors looking for investment properties to rent for vacation purposes. These have proven to be very lucrative and sometimes produce more income than traditional investments.

However, before starting a vacation home rental, ask yourself: Am I willing to live with the tenants? Who will organize the cleanup? What is the best price I should charge? What are the legal regulations for paying taxes for renting with Airbnb?

6. Invest in commercial real estate

What does it consist of?: buying commercial buildings and renting them out to companies
difficulty: high
How much money do you need to start investing? Usually, you will need a large amount of money

The US commercial market is huge, so investing in commercial real estate pays big and can have big benefits. Commercial properties are rented to various types of clients: from small businesses to medium-sized stores, to giant shopping malls.

This strategy is not for beginners and requires a lot of education and experience, but it is a great level to reach when investing in real estate for the long term.

7. Connect sellers with buyers

What does it consist of?: having contacts and connections with frequent buyers and sellers
difficulty: high
How much money do you need to start investing? It is an ideal way to invest in real estate without money.

Earning money in real estate does not always require spending money, as there are many opportunities to invest. For many, connecting buyers and sellers may be the best way to earn money by investing in real estate without having any money.

It works like this: A seller property owner wants to sell his property and has not been able to do so. Your job is to find a buyer and collect a commission on the sale price.

To be successful with this strategy, you must know how to connect buyers and sellers, using advertising or an online network that connects both parties.

Connecting sellers with buyers is the most common way to invest in real estate.

Other ways to earn money with real estate

Some users have suggested other methods of making money with real estate, especially if you want to invest in real estate without having any money. These are other recommended investment methods:

Property locator. Your role: You identify the properties that you think may be good opportunities for real estate investors. This could include properties that are vacant or in need of repair. You provide this information to buyers. You can charge a fee (often between $500 to $1,000) at the closing of the property if your information results in the purchase of the property. Cost: $0.
House repairman. Your job: You buy a house or apartment that needs repairs. You fix up the property and sell it for a profit. To get started, you’ll need to put up at least 10% of the value of the property. For example, you can buy a house that needs repair for $320,000. Let’s say you need $30,000 for work. You will need a down payment of $32,000 (10%). Total invested: $62,0000. You sell the property for $500,000 for a profit of $150,000.
Using borrowed money. Many people seek private money when they cannot obtain financing themselves. If you have good credit, you can get a loan and buy a house with low initial investment and benefit from its appreciation in value over time.
Partner with other investors – There will be investors looking to partner, but these partners are not easy to find. Many also hope to work with someone with experience.
Smaller Unit Rentals – If you buy a multi-bedroom house, you can live in it and rent out one room. This allows you to earn additional income to pay your mortgage.
Parking space rental. If you live in a big city where finding parking is a nightmare (like New York, Los Angeles, or Miami), your parking space can become a real estate investment. You can rent your space to a business person or someone who drives into town regularly.

Investing in real estate: Summary

It is not easy to invest in real estate, but it is possible. There are many ways to do it, but they all take work and sacrifice. The successful real estate investor works on educating himself and sticks to a strict plan.

Among the most successful ways to invest in real estate are:

Buy and sell properties
buy and repair
Leverage
Invest in commercial real estate
Invest passively in real estate
Rent vacation properties
Wholesale Real Estate

How to invest in real estate: Opinions

We hope that our guide on how to invest in real estate will serve as a starting point to start investing in real estate. Remember that if you have any doubts or questions about these investment ideas, you can leave us a comment and we will help you solve your concern.

What is the best way to invest in real estate? How to make money with real estate? We want to know your opinion. If you have had any experience investing in real estate, leave us a comment below and tell us your anecdote.