Hearing stories of people making it big in real estate can motivate you to do the same. But if you’re busy with work, it can seem impossible to make time to get into real estate investing. The good news is that you don’t have to play an active role in flipping houses or catering to tenants. By investing your money in reputable projects, you can reap the rewards just like any other real estate investor would. Read on to learn more about real estate investing for busy professionals and discover effective strategies.
Why Invest in Real Estate?
Here are just a few benefits of investing in real estate as a busy professional:
Positive Cash Flow
Selling a property at an increased rate is one of the most obvious ways to benefit from real estate investing. However, you can also generate a positive cash flow while owning the property. For instance, imagine an investor buying a home and renting it out to a family. The investor’s mortgage and expenses for maintaining the home might be $1,500 per month, but they can charge the family $1,900 for rent. The extra $400 is pure profit for the investor, allowing them to generate income while still owning the property.
When you invest in real estate, you may be eligible for certain tax benefits that allow you to keep more of the money you earn. For instance, imagine you buy a home for $300,000. The government allows you to write off a percentage of the home each year for 27.5 years to account for the home’s depreciation. This amount helps offset your liability for the cash flow the property generates from rent. If the depreciation value of the home exceeds the cash flow you generate from the property, you can use it to decrease other sources of taxable income.
While real estate comes risk, just like any other type of investment, the risk can be significantly less. The resilience of the real estate market helps many investors feel secure in the money they contribute to properties. Property values are incredibly resilient when on the lower end of the spectrum. For instance, consider a $250,000 property that loses 5% of its value during a recession. The investor can continue to generate income from the property by renting it out. When the market improves and the property increases in value, the investor can sell it for a profit.
Traditional real estate investors are heavily involved in the process. They might oversee the flipping of houses by hiring contractors or even performing the renovations themselves. Others might act as landlords by collecting rent and responding to tenants’ concerns. The work involved in real estate investing can deter some people, but fortunately, there are more passive opportunities than ever before. Investors can allow others to manage properties while still benefiting from the money they contribute to projects. As we discuss later, you can benefit from passive opportunities ranging from trusts and private lending to syndication.
Tips for Becoming a Real Estate Investor
Here are some tips for becoming a real estate investor as a busy professional:
Increase Your Income
While it might seem like an obvious tip, increasing your income can make real estate projects more accessible and allow you to raise your returns. Busy professionals need to make the most of their hard work. Consider evaluating your skills and determining your worth to an employer so that you can advocate for a pay increase at your current job. Alternatively, you might switch companies to obtain the salary you deserve. When you start earning more money, it can be easier to set aside the funds you need to pursue your real estate investment goals.
Do Your Research
Even if you’re a busy professional looking for passive opportunities, learning about real estate investing may increase your chances of success. Consider researching the best practices and latest market trends to understand what projects are likely to yield positive returns. You might even get a mentor or request support from an expert at Titan Funding.
Define Your Goals
Everyone loves the idea of making money through passive real estate investing, but you can get more specific with your goals. Consider asking yourself whether you want to start this endeavor to diversify your portfolio, save for a child’s college fund, or even retire early. Identifying your goals can help you make a realistic plan and create smaller, more realistic goals.
Real Estate Investment Strategies for Busy Professionals
Here are some passive real estate investment strategies for busy professionals:
Invest in REITs
A real estate investment trust (REIT) is an asset that investors can publicly trade on the stock market. It performs like an index fund, meaning it tracks the performance of large firms that own and manage properties. The broad nature of a REIT makes it less risky than a traditional stock that only tracks the performance of a single company. REITs are widely available and have low minimums that allow you to get started even if you’re a new investor.
Participate in Private Lending
It’s becoming more common for real estate investors to look for loans outside of traditional banks. You can fill this need by offering private loans to real estate investors. If the borrower defaults on the loan, the property’s value protects your investment. Private lending is an incredibly safe strategy when you partner with a provider like Titan Funding.
Syndicate With Other Investors
Instead of using $100,000 to buy a single property, you might team up with other investors to invest in a bigger project. This $100,000 could earn you a stake in a $1 million home. You can receive a return on your capital by trusting active investors and other providers to coordinate the property’s management.
As this guide has demonstrated, busy professionals have the power to invest in real estate. By using trusts, participating in private lending, or syndicating with other investors, you can let your money do the work for you. If you have questions about how to start working toward your financial goals, contact one of our experts today.