Real Estate Investing for Beginners: Preparation + 5 Effective Methods

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Are you planning to start your career in real estate investing? Are you looking for information about real estate investing for beginners? We have put together know-how about preparing your real estate investing journey and listed 5 effective methods for you to start.

Preparing for Your Real Estate Journey

  1. Your financial goals
  2. Your investment timeline goals
  3. Your current capital
  4. Your risk tolerance
  5. Your investment partners

5 Effective Methods for Real Estate Investing for Beginners

  1. Rental properties
  2. Real Estate Investment Trusts (REITs)
  3. Real Estate Investment Groups (REIGs)
  4. Flipping properties
  5. Online real estate platforms, Joint Ventures, and crowdfunding
Real Estate Investing for Beginners

Preparing for Your Real Estate Journey

Before explaining methods for real estate investing for beginners, we should talk about creating a plan to get a better picture of your future investment. Here are some of the necessary steps to follow when it comes to planning:

1. Your Financial Goals

You can start by asking yourself, why do I want to invest in real estate? How many earnings do I want to make by creating my real estate investment? This category of questions can illuminate your deeper reasoning for getting into real estate investing. Without having a deep understanding of yourself, you can not take more substantial steps and decide on the line of your investment.

2. Your Investment Timeline Goals

Next up is to understand your investment timeline. You can ask yourself questions like, when do I want to get started? How long do I want to invest? What is my time expectation of earning income? With the right set of timelines planned out, you have a more straightforward path for your upcoming real estate investment.

It would help if you also allocated daily/weekly time slots to work on your investment portfolio. At this stage, you need to find out how much time you have available to work on your investment portfolio.

3. Your Current Capital

The easiest part of your preparation is to sum up, your capital and available funds for your real estate investing. To decide your capital allocation, you have to consider all aspects of your life. If you have a family, you should consult with them. If your income is limited, you should decide on a percentage of your available fund to invest in real estate. Although this step is easy, it is the most important step of preparing for real estate investing for beginners.

4. Your Risk Tolerance

Since specific real estate projects are riskier than others, you should understand your risk tolerance to pick a suitable project to invest in. This preparation step is related to the previous step about your current capital. It would be best to decide how much risk you will be putting a certain percentage of your capital on.

5. Your Investment Partners

Sometimes having an investment partner can help you accelerate faster into your profits. For example, if your available capital is not enough to invest in a unicorn project, then you can look for partners to invest with you. At this stage, you should understand yourself and plans if you should be working with a partner or not.

5 Effective Methods for Real Estate Investing for Beginners

Now that you have a plan in place, we can talk about 5 effective methods for real estate investing for beginners. Here are some of the most popular methods for beginners to start with real estate investing. You should pick the ones that match the plans that you created in the last section:

1. Rental properties

As straightforward as it is, this method is to purchase a property and rent it out to earn monthly revenue. You can either buy a property entirely by your capital or finance it using loans and have the monthly earning cover the loan payments. Many people use this method as their real estate investing for beginners method.

However, you are responsible for upkeep, cleaning between tenants, big repairs and replacement, and paying property taxes as a property owner.

Pros:
  • Steady income
  • Property appreciation
  • Tax-deductible schemes
  • Safe
Cons:
  • Managing tenants
  • Costs for repair and replacements

2. Real Estate Investment Trusts (REITs)

If you are looking to make a quick investment of any amount, REITs are suitable.

REITs, Real Estate Investment Trusts, are publicly traded trusts that own and manage rental properties and give investors dividends. REITs are traded on the stock exchange so that you can enjoy the liquidity advantage of your investment.

Pros:
  • Passive investment
  • No investment floor amount
Cons:
  • Paying fees
  • Trusting fund managers with your capital

3. Real Estate Investment Groups (REIGs)

If you do not want to get involved in the hassle of property management and costs, REIGs is a suitable option.

REIGs, Real Estate Investment Groups, are investment groups that purchase and manage properties and then sell off parts of the property to investors. They also take care of the rental operation, leaving the investors as passive as possible.

Pros:
  • Passive investment
  • Asset ownership
Cons:
  • Paying fees
  • Trusting group managers with your capital

4. Flipping Properties

Flipping properties is all about buying cheap, repairing, selling more expensive. Flipping can also be buying at a bearish market, waiting, and selling at a bullish market. This method is riskier and more complex than the previous methods since so many factors affect your investment’s profitability. Looking at real estate investing for beginners, this step might not be the best choice.

Pros:
  • Shorter investment period
  • High rewards
Cons:
  • Risky
  • Requires knowledge and experience

5. Online Real Estate Platforms, Joint Ventures, and Crowdfunding

The last method is about finding investment partners and project involvements online. Suppose a company or a group of investors are looking to invest in bigger commercial or residential projects than their current capital. In that case, they can list these investments online for other investors to join.

Depending on the investment scheme and your capital size, you can join a pool of investors within a crowdfunding scheme or start a Joint Venture (JV) with fewer investors to have a more hands-on investment experience.

At Sunshadow Investments, we bring investors together for Joint Venture projects with healthy ROIs. Contact us to find out more.

Pros:
  • You can create a portfolio of different investments
  • Location independent
  • Healthy ROIs
Cons:
  • Investment lockup period
  • Management fees

Conclusion

As mentioned at the beginning of this article about real estate investing for beginners, you need to plan your investment properly and understand your style. Once you know your investment style, you can pick a method that matches your real estate investing style.

At Sunshadow Investments, we can help you find projects in Cyprus to invest in as a solo investor or a Joint Venture. If you are interested, do not hesitate to contact us at info@sunshadowinvest.com, call us at +357 24 816246, or Book a 20-Minutes Online Meeting.

Related:

Influential Real Estate Investment Books for Beginners

8 Influential Real Estate Investment YouTube Channels for Beginners of 2021

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