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How To Invest Money In Real Estate – A Guide For Total Beginners

Are you new to real estate investing? Have you been thinking about putting your money into real estate but aren’t sure exactly how to do it or where to start.

 

Don’t worry, we got you.

We’ve been there, and we totally get it. There are a vast array of options available when it comes to real estate investing – everything from fix-and-flips like you see on HGTV to real estate crowdfunding sites to owning rental properties, and everything in between.

Because there are so many ways to invest your money into real estate, most people get overwhelmed and give up before they even start.

But you’re not most people, amirite?

You’re here because you’re committed to your financial education and to your family’s financial future. You’re committed to learning the best way to put your money to work for you, so you don’t have to work so hard for your money. You’re committed to learning as much as you can so that you can make a smart and informed decision.

Good for you. You should be proud of yourself.

A great place to start is with the video below, where we talk about the one big question that everyone should ask themselves when starting out investing in real estate. Once you figure out the answer to this single question, you’ll have a much better idea of your next steps in investing in real estate.

Video Transcript

Have you been thinking about investing some money into real estate but don’t know where to start? You see the fix-and-flip shows on TV and probably also have a crazy uncle Bob who owns a bunch of rental properties, but you’re not sure what’s the best fit for you.

In this video, I’ll share with you the one big question you must ask yourself when deciding how to invest your money in real estate. If you can just answer this one question, you’ll be well on your way to becoming a savvy real estate investor.

Knowing the answer to this single question will save you hours of headaches and investment decisions that just don’t fit with your investing goals.

So are you ready? Okay, let’s dive in.

As you may know, there are TONS of ways to invest your money in real estate. You can buy a house and rent it out. You can Airbnb a condo on the beach. You can buy a piece of land on Craigslist (that’s right, Craigslist) and then sell it to someone else. You can invest in storage facilities or office parks. You can even rent out rooms in your own house.

However, that’s exactly the problem that many people who are starting out investing in real estate face. With so many choices, how do you decide what’s right for you?

Lots of people will start by turning to their friends who have seen success in real estate investing and copy what they do. If their friends own rental properties, they’ll invest in rental properties. If their friends have invested in land developments, they’ll consider that too.

It’s easy to get caught up in what other people are doing. But, in order to make real estate investing work for you and help you reach your investing goals, you’ve got to remember why you’re investing in real estate and what you hope to gain from it.

Besides the goal of “making money,” why are you investing in real estate? Why not stay with the investments or savings you already have? What is it about real estate that attracts you?

Are you hoping to create monthly cash flow so that you can eventually replace your salary and quit your job? Are you looking to roll your sleeves up and get involved in renovations? Are you looking for a short term or long term payout?

So the first step when considering investing your money in real estate is to think about what you want out of it. Once you have a good idea of your investing goals, the big question to ask yourself is, how much involvement do you want to have? That is, do you want to be an active or passive real estate investor?

Are you thinking that, like stocks, you’ll put your money in and then not have to think about your investment? Or do you want to have more control and involvement week to week and month to month?

If you’re looking for a set-it-and-forget it type of investment, you are a passive real estate investor. You should look for passive real estate investments, such as investing passively in real estate syndications. These group investments will let you put your money into real estate, without having to do any of the work of managing or renovating the property. You just get a monthly return and then a split of the profits when the asset is sold.

Most people have never heard of passive investing through real estate syndications. I had been investing in real estate for 10 years before I stumbled upon them. And boy do I wish I’d known about them sooner.

As a passive real estate investor, I get all the benefits of investing in real estate (including the tax benefits) without having to fix any toilets, which is a win, if you ask me.

If, on the other hand, you want a bigger role and more control in your investment, then you should be an active real estate investor. There are LOTS of ways to invest your money actively in real estate, and this is the path that most people think of when they think of real estate investing. Active real estate investing includes everything from wholesaling to fix-and-flips to buy-and-holds.

If you want to be highly involved and are looking for a short-term investment, consider looking into fix-and-flips. This is one of the best ways to roll your sleeves up and really learn the business.

If you are looking for monthly cash flow and want to invest for the long term, consider a buy-and-hold rental. As the name would suggest, this is when you buy a small rental property and rent it out. You can manage the property yourself or employ a property manager. Then, after paying the mortgage and other expenses, you collect the monthly cash flow.

If you’re looking to do something bigger, you might consider looking into a joint venture partnership or becoming a syndicator yourself. Remember earlier when I was talking about investing passively in real estate syndications, or group investments?

Most of the investors in a syndication are passive investors, but a small group are the active syndicators. They are the team who put together the investment. If you think you want to be highly involved in the acquisition, underwriting, asset management, or capital raising for a large commercial project, you might want to consider this route.

So all in all, the big question to ask yourself when you’re thinking of investing money into real estate is how involved you want to be. If you want to be an active real estate investor, think about what types of roles you want to play, how involved you want to be, and how much money you have to play with.

If you’re looking for a set-it-and-forget-it type of investment, look into investing passively in real estate syndications.

If you’d like a more comprehensive walkthrough of passive investing through real estate syndications, be sure to grab a free copy of our new book, Investing For Good: The Surprising Strategy For Building Wealth While Also Making An Impact.

And finally, if you liked this video, hit the like button below, share it with your friends, and be sure to subscribe. I’m Annie Dickerson with Goodegg Investments. Thanks so much for watching, and I hope you have a sunny-side-up day.

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