How Do I Invest in Real Estate?


Whether you’re looking to become a landlord or you just need extra cash flow, real

estate can be a great investment option. But how do you get started?

For many new investors, the thought of owning property and becoming a landlord is

intimidating. Fortunately, there are many ways to invest in real estate without

adding on additional responsibilities.


Investing in Real Estate

The real estate market can seem intimidating, especially to new investors. But you

don’t have to start out with a large portfolio: Even if you can’t afford to purchase a

property on your own, there are other ways to get involved in the industry.

For example, many people invest in real estate by purchasing their own homes,

which are direct investments that generate rental income. Others may choose to flip

houses, which involves buying properties and reselling them for a profit.


Investors also can purchase publicly traded REITs or real estate ETFs, which offer

broader exposure to the real estate market. These funds can be a good source of

passive income, but they are not without risk.

If you’re interested in investing in real estate, a financial advisor could help you

figure out which type of investment is best suited to your financial goals and

lifestyle. Moneymatch can connect you with financial advisors near you.


Buying a Rental Property

Real estate investments are a popular way to diversify your portfolio, especially

since their prices tend to rise over time. You can buy a physical piece of property to

rent out, or you could invest in rental properties through REITs or online real estate

platforms. Each option has its own pros and cons, so it’s important to consider your

investment time horizon and what kind of structure aligns with your personal goals.

If you want to be a landlord, you’ll need to factor in expenses like mortgage

payments and maintenance costs, as well as advertising and credit checks. And it’s

a good idea to have an attorney review your lease agreements.


A financial advisor can help you assess your risk tolerance, determine what type of

property investment is right for you and develop a strategy to get there. NerdWallet

matches you with qualified advisors in your area. You can interview them at no cost

to decide if they’re a fit. Read more


Buying a Single-Family Home

Buying a single-family home to rent out is one of the most popular real estate

investment strategies. However, this requires time and a lot of work — from finding

tenants to dealing with maintenance issues. Plus, the return on this type of

investment is often lower than if you invest in a rental property.


A townhouse or condo might be a better option if you’re interested in an investment

that will help boost your cash flow. But keep in mind that with these types of

properties, you’ll likely be sharing walls and other spaces with neighbors.

Flipping houses may be another way to invest in real estate if you’re a skilled house

hunter and can spot deals that will make money. But be aware that this can be a

risky investment, especially if the housing market takes a dive. And you’ll probably

have to put down a sizable down payment to get the loan you need.


Buying a Commercial Property

Real estate is a tangible asset, unlike stocks and bonds. And it’s a great source of

passive income if you rent out your property. But it’s important to do your research

and know what you’re getting into before diving in.

Commercial properties (CRE) can be a great investment for people looking to

diversify their portfolio and generate steady cash flow. They typically offer higher

rental rates than residential property.


However, commercial properties can be expensive and require a large down

payment to purchase. If you’re not able or willing to purchase commercial property

outright, there are other ways to invest in CRE.


Depending on your investing goals, you may benefit from a professionally managed

portfolio of commercial real estate. A financial advisor can help you determine if this

is the right strategy for your needs. Money matches you with advisors in your area

who can provide personalized recommendations at no cost to you. Learn more about

how Money can help you reach your investing goals.

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