Real estate can be one of the most lucrative forms of passive income that you can get into. Having your investments work for you can pay out exponential dividends in the long term. We want to cover how to get started in real estate so that you can build up a solid portfolio of property investments and generate significant passive income for yourself and for your family.
The main goal of real estate investing is to put some money into an investment, let the investment grow over time so that you come out at the end of it with more money that you put in. This is what is known as an asset and assets can be extremely powerful in helping you put a nice chunk of change into your pocket. There will however be some upfront work to be done when you decide to get started in real estate, but once you have a property or a few properties purchased and set up it is for the most part passive income.
With all that being said there are risks involved with real estate investing just like with any other form of investing. But if you do your research correctly and minimize as much risk as possible you have a good chance of making a successful real estate property portfolio.
Getting started with real estate is not easy and you will need to recoup all the costs that you spent on your property and generate profits in the long term. You always want to think long term when it comes to real estate investing because getting started with real estate to just make a quick buck is probably going to end in one of many disasters. So you want to avoid that mindset at all costs.
Let’s cover some ways in which you will be able to generate income with your properties so that you have a good understanding of how you can make money with real estate investing and have the option to increase your property portfolio for the potential of making even more money.
Appreciation Of Your Properties Value
When you purchase a property you are entering the real estate market and depending on many factors your property can appreciate/increase in value over time. For example, if you purchase a property and then make significant upgrades to the property, making it even more attractive to potential buyers, you will be able to sell that property for a higher price or rent it out for a higher monthly rent price.
Solely relying on property appreciation is probably the most risky way of banking on profits with your property, simply because the real estate market is so volatile and you run the risk of a real estate market crash, a tough situation for all real estate investors.
However if you combine property appreciation with all the other ways of making money with real estate you will be off to a good start with your knowledge and be able to set yourself up for the most success with your property.
Renting Your Property Out To A Tenant
This is probably the quickest way that you can start to see a significant return on your property investment. Renting out your home to a tenant can bring in some pretty healthy passive income each and every month and is relatively stable given the nature of the lease agreement between you (the landlord) and the tenant.
This method is not free from risk though as tenants can stop paying rent without any prior warning or they could damage your property causing thousands of dollars worth of damage. This is why you want to make sure that you have all the required insurance on your home in case you run into any disaster situation between you and your tenants.
What many real estate investors like to do is purchase a property at a price that is affordable for them and then renovate the entire home, making it very attractive to potential tenants. You will not only be able to charge more in rent each month, but you are generally given more peace of mind that your property is in good hands with your tenants if you take on tenants that are willing to pay more in rent each month.
This is one of the most common ways to get started with real estate and you may even consider hiring a property manager to look after your property and your tenants for you if your budget allows you to do so. Having a property manager will take a lot of stress off your back and save you a ton of time each month, giving you more time to focus on things that are important like searching for new properties to buy or designing renovations for your newly property.
You can even increase the amount of money you receive in rent each month from 1 property by renting out portions of the property to different tenants. You may choose to rent out the main part of the property to a family and then another portion of the property like a side portion of the house to another family. This is another option to get started with real estate and increase your passive income, but it is not always the most ideal situation as often when you do that the different families will have to share common areas of the property.ur property.
Real Estate Related Income
This is a form of income generated by becoming a specialist in the real estate industry, such as real estate brokers and real estate agents. Both of these choices can be very lucrative career paths if investing in real estate is not your cup of tea.
However when it comes to becoming a real estate agent or a real estate broker in order to earn an income from real estate, bear in mind that it will take some time, experience and studying to be able to become licensed and work as either a broker or an agent. When it comes to succeeding with this form of real estate income it is super important to think long term as experience is the number one thing people look for in this field of work.
Both of these sources of income will help you get started with real estate and secure you financially, and can be very long term career choices. The more experience you have as either a broker or an agent, the better jobs you can acquire and the more you can earn each month, making your investments worthwhile.
So far we have covered how to get started with real estate as an independent investor, now let’s look at the other side of the real estate coin and that is how to get a real estate license and how to become a real estate broker. Two very important ways of earning a living worth talking about when thinking how to get started with real estate in 2020 and beyond.
Obtaining Your Real Estate Licence
When deciding to get into the real estate world, the first thing to take into consideration before you ask yourself how to get your real estate license is one very important factor and that is an interest and passion for real estate.
Getting your real estate license will not be that easy and you will run into some tough times in the process, but if you are highly passionate about getting your real estate license then that passion is what will help you persist through the learning phase and eventually you will be able to obtain your real estate license.
So how does getting a real estate license help you make money in the real estate world? Well with a real estate license you will then be able to become a real estate agent and get started with real estate by being an agent and not an investor. This may be a good option for you since investing in real estate will take a lot more money from you compared to obtaining your real estate license and becoming an agent.
Getting started with real estate as a real estate agent comes down to having the following five things in place:
- Taking a pre licensing course
- Passing your state licensing exam
- Filing a real estate licensing application
- Finding a real estate brokerage
- Joining the National Association of Realtors
Going over each of these requirements individually is out of the scope of this article but that is what you need to have in place in order to get a real estate license. Have those things in place and you can begin working as a real estate agent and begin making money through your efforts. This will not be passive income but you will still be heavily invested in the real estate world and you will be able to gain some pretty priceless experience in the real estate field which can serve you in the long term.
A common question that we get is how to get a real estate license in Denver, Colorado and the same steps apply, they are generally universal requirements that you need to meet before you are able to work as an active real estate agent in Denver, Colorado or anywhere else in the world. You will just have to look up the applicable real estate association for your given location when taking those five requirements into consideration.
Becoming A Real Estate Broker
Before we dive head first into how to become a real estate broker, we want to address the difference between a real estate agent and a real estate broker.
A real estate agent is anyone who has earned a real estate license. A real estate broker is an agent who has also passed their broker license exam. The primary difference between a real estate agent and broker is that a broker can own a real estate firm or hire agents to work for them.
Let’s go over some of the requirements so you can have a clear understanding on how to become a real estate broker if that is something you might be interested in or if you are considering as a career in real estate.
The U.S. Bureau of Labor Statistics (BLS) states that a high school diploma is the minimum education requirement for this career field. Licensing guidelines in most states require applicants to complete post secondary coursework related to real estate and finance. Real estate undergraduate courses include real estate law, property management, real estate investments, real estate appraisal, and property development.
Training Required To Become A Real Estate Broker
Before you can become a licensed broker you will need to gain some experience first by working under some experienced brokers as real estate agents. This will allow you to quickly get a feel for the real estate market and learn firsthand how to find the best properties for potential clients.
Most brokerage firms train agents to complete real estate paperwork, including loan applications and property title documents. After gaining enough experience as an agent and building up a reputation, agents can open up their own businesses and become real estate brokers.
Whether you want to invest in property or become a real estate agent or a real estate broker, getting into the real estate world can be very beneficial both financially and in the knowledge you acquire while experiencing first hand what it takes to succeed in the real estate world.
We hope we covered all of your questions in this article, but if for any reason you still remain unclear on anything then feel free to get in touch with us here. With many years of experience we know what it takes to succeed in this industry and we would be more than happy to help you out and answer any and all of your questions or concerns that you might have.