How much money do you need to invest in real estate?
Looking to invest in real estate to start earning some extra cash flow? Turns out, you don’t need a lot of money saved or a trust fund waiting to be spent in order to start making money as a real estate investor today. You just need a decent credit score, an entrepreneurial spirit, and an understanding of how real estate investment works.
How can I invest in real estate with no money?
Investing in real estate does not require a significant amount of capital on the front end. Many investors begin their careers by purchasing a smaller turnkey home that does not require extensive updates or upgrades before renters can move in. If your credit score is high enough, and if the home you’re attempting to purchase is reasonably priced and within the range you can comfortably afford, you might even be able to get away with purchasing a rental property with little to no money down.
READ MORE: What is a turnkey investment property?
Other Ways to Secure Real Estate Investment Loans
If you’re attempting to purchase a real estate investment property and need access to funds to secure your investment, here are a few ways to attain capital.
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Microloans for Business Owners
Microloans are smaller than home loans - typically the size of a car loan or slightly larger. Microloans are a great way to gain access to investment capital quickly. While some financial institutions may provide microloans to individual members on a case-by-case basis. Women, low-income applicants, and minorities may have a better chance of securing small loans from a bank for entrepreneurial purposes, but you may have to seek out other options from microfinance lenders. It’s important to note that any lender will likely require a well-formed, professional business plan, a great credit score and a clean credit report, and personal collateral before lending you any amount of funds.
READ MORE: 4 Books You Need to Read if You’re Considering Real Estate Investment
How much do real estate investors make?
The amount of income a real estate investor generates depends on how much money he or she has invested in real estate investment properties. Higher value properties obviously generate higher rental rates and more income for investors, but they require significantly more capital on the front end. Many real estate investors opt to purchase homes in the low end of the median home value bracket. This allows room for improvements, expenses, and more while allowing an investor to choose from a higher quality of rental applicants.
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What is the difference between a passive real estate investor and an active real estate investor?
An active real estate investor is an individual who actively locates real estate investment properties at a great value and often makes updates and renovations before seeking out renters. Active real estate investors may also serve as their own landlords, playing an active role in collecting monthly rent payments, managing legal and financial aspects of investing, and more. Active real estate investors often invest locally in order to understand their market, their target rental demographic, and other factors. They may form a real estate investment partnership with other investors or work solely as an entrepreneur to generate monthly cash flow.
READ MORE: Guide to Investing in Your First Turnkey Rental Property
Passive real estate investors are those who prefer to generate income without the extent of involvement of an active investor. Passive investors often work with real estate investment management groups who offer turnkey investment properties which are already updated and ready to rent, which removes the hassle of the renovation process entirely for the investor. Passive real estate investors may also take advantage of real estate investment groups who offer property management services and consulting.
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