You may have considered becoming a real estate investor because, like many people, you believed that if you grew up, achieved decent grades, and attended college, you would be prepared for life.
But once you started working there, you realized that 9-to-5 jobs are demanding, don’t provide you much freedom, and aren’t well paid.
What other choices do you have then?
You will still experience the same problem with income scalability even if you land a better job with a greater salary. Your income is constrained by having a job, whether you like it or not.
And now that you realize the income potential of real estate investing is endless, you think if you can really become financially independent as a real estate investor.
Alright, so How To Become A Real Estate Investor doesn’t exactly fit into a nice category.
At the end of the day, becoming a Real Estate Investor is a… unique way to think about making money.
It’s certainly possible to make money with off-the-wall businesses like this. Still, unless you’re interested in taking years out of your life to experiment with an unproven business model, I would look elsewhere.
My #1 personal recommendation if we’re talking about starting a fully-online business has got to be the Lead Generation & Ad Agency business models.
There are a handful of programs that teach you the ropes, but my #1 choice that combines both of those business models into one is the Digital Landlords program
But, if you’re hard pressed to jump head-first into an off-the-wall business model, let’s continue on to my full breakdown of How To Become A Real Estate Investor.
What Is Real Estate Investing?
Real estate investing is one of the oldest ways to make money on your own, and it’s not the same as being a real estate agent. Buying property investment is merely for cash flow.
One of the five basic asset classes is real estate. To balance a portfolio, investment advisors usually advise having some investments in real estate.
Real Estate investors typically have many unique benefits compared to other asset-based classes. To name a few, you’ll get tax advantages, dependable cash flow, and the potential for appreciation on the property. It’s worth noting that if you hate taxes as much as I do, this is probably the one wealth-building model that grants you so many tax advantages it might as well be a middle finger to Uncle Sam.
Different Real Estate Investments
In general, real estate is avoided by most people because it is expensive and demands a good credit rating. And while it most certainly is, there is a slight possibility that you won’t have to pay cash for the house and put 20% down on the investment properties.
Others believe that simply because they own an investment property, they are, in fact, landlords.
Most people dislike that idea and how it makes them feel.
However, there are many other ways you can get invested in real estate if you’re dead set on it! Throughout this article, I’ll look at the 4 most common ways people like yourself become a real estate investor: real estate investment trusts (REITs), house flippers, buying investment properties directly, and real estate development.
You can certainly make money with real estate investing, but if you’re gonna put in the amount of grueling work to become a real estate investor (which, trust me, isn’t easy), you might as well bring in some REAL money.
The program that helped skyrocket my online business to $40,000+ per month teaches some of the same real estate skills but shows you how to monetize them in a much more profitable way.
A real estate investment trust is the first popular method of real estate investing I’ll discuss. It resembles a mutual fund partly. This one requires you to buy stock in a real estate portfolio that professionals in the real estate industry manage. Every REIT must distribute 90% of profits to investors due to federal regulations.
You’re also able to buy and sell these “stocks” whenever you want, which is great if you prefer to have the ability to liquefy at a moment’s notice. However, the drawbacks are that returns are lower than direct investment, and you don’t get the tax benefits like the other options.
Buy Rental Properties
Even though it could be challenging if you still owe money on student loans, you can invest in real estate by directly purchasing rental properties. Most first-time investors buy a small multi-family property and rent out the basement or the other half if they are limited to cash.
It’s a great alternative because it provides you with some good financing and allows you to experience being a landlord on a smaller scale.
To put it in perspective, most experienced real estate investors teach what allows you to live there mortgage free!
But, this doesn’t mean you’re limited to only residential property; as a real estate investor, you can buy pretty much anything. You can rent out industrial space, warehouses, office space, retail, and anything else for a cash flow profit.
Regardless of the type of real estate you purchase, buying rental property can be done either actively or passively. Owning and managing rental properties can be time intensive (active). Still, many investors outsource the day-to-day responsibilities to a third-party property manager (passive) to be freed of obligations like showing properties, running credit checks on prospective tenants, collecting rent checks, overseeing repairs and maintenance, etc.
No matter which real estate your purchase, you can choose an active or passive role. Managing all the properties can be time intensive, and most people outsource all the day-to-day responsibilities to management companies. Some of these responsibilities include:
- showing properties
- running credit score checks on prospective tenants
- collecting rent
That might sound great, but those services cost a pretty penny and can quickly cut into your monthly profits!
My team recommends a real estate model that doesn’t require nearly as much OVERHEAD as this model does. CHECK IT OUT!
Do you remember the TV shows your mother used to watch all day long? It was probably a show about flipping houses! In fact, some say that flipping houses are more like running a business than investing.
Simply purchase the house at a bargain, make repairs, and then resell it for a profit. Of course, that is oversimplifying, but that is a general idea.
The turnover rate for house flipping is pretty fast in this market, typically 6-12 months, which means free time will be few and far between.
Beginners typically do all the work themselves. After they’ve saved a pretty penny from the first few properties, they invest in a general contracting company to perform the work and free up their time.
It’s a double-edged sword because outsourcing can cut into your profits, so it’s something to be conscious of.
But why just continuously buy and flip homes when you could just build one for a few hundred bucks and get thousands out of it each month?
Invest In Real Estate Development
Another common way to invest in real estate is through real estate development. Although there are many different options, the most common is when an investor buys up a vacant piece of land with plans to make it income-producing.
Neighborhoods are perfect examples of this. A real estate developer will buy a piece of property for, say, $1,000,000, and they know they can build 20 homes on that land for $500,000 each.
Do the math…
The only downside with this business model is that once the homes are all sold, the real estate developer has to move on to the next piece of property…there is no recurring income with this model.
If recurring income investment opportunities are what you’re after, check out this business model instead!
Step-By-Step Guide On How To Become A Real Estate Investor
Step 1: Identify Your Source Of Funding
When investing in real estate, you’ll first need to decide how you’ll raise funds needed.
Most first-time buyers leverage the equity in their first property to purchase a second one using their savings account.
But don’t be too upset if you can’t pay cash for a property. Most investors only put down 20 to 30%, with the remaining funds coming from their rent. Similar to how the 2008 housing crisis first began!
Types Of Real Estate Funding
Real Estate development investment opportunities have general and limited partners who all together put the equity into the deal. A general partner will be more active in decision-making while the limited partner typically takes a back seat. The equity of that deal is then paired with debt financing. The more equity, the better the rates.
Step 2: Create An Investment Strategy
As I mentioned above, there are two major investment strategies for real estate investors. You can either be ACTIVE or PASSIVE.
When choosing an active real estate investing, you are an investor that is directly involved with every process. It’s your time, your capital, and your risk involved. Simply put, you are involved in all the heavy lifting.
Active real estate investing examples include wholesaling, property flipping, and development.
Passive Real Estate Investing
Passive real estate investing is the type of real estate investing most people want. It’s mainly passive, as the name implies. However, you have to be ok with your income growing a bit slower than the active options. This is also the option that typically has nice tax benefits.
Step 3: Identify Your Target Market
Once you’ve figured out how you’ll get the capital you need and what type of investing role you will take, it’s time to pick your target market.
Investing in bigger cities is generally the safest approach because these markets tend to hold their value and even appreciate over time.
Most investors, especially those beaten out of primary markets, choose to invest in secondary and tertiary markets. Real estate in these markets tends to be cheaper, meaning the barriers to entry are lower. Yet real estate in secondary and tertiary markets tends to be more at risk for market swings, making it a bit scarier. With big risk comes the chance for higher profits, so investing in these markets may appeal to those with money to play with.
Step 4: Understand The Risks Of Real Estate Investing
Real estate investment may come with a fair share of benefits, but it’s not bulletproof. Here’s a short list of the risks you will assume upon entering a market:
- General Market Risk: A weak economy could lead to property values depreciating. Properties with high leverage could go underwater fast or even default on loans!
- Asset Level Risk: This is risk based on class; for example, shopping centers everywhere turn up vacant daily as more consumers have switched to online shopping. Hotels are also a risk depending on consumer spending and travel patterns. Multifamily properties and industrial properties are usually a safe bet because they aren’t prone to risk like that.
- Property Specific Risk: This is the risk one assumes with every property; think of it as miscellaneous. The water heater could go out, unusually high vacancy, and so on.
- Liquidity Risk: It’s hard to liquify your real estate assets compared to stocks and cryptocurrency.
Is Real Estate Investing Right For You?
So, after all that info, are you still wondering if real estate is right for you? Ask yourself some of these questions…
- Do you have a lot of time to invest? Real Estate will eat up a lot of it in one way or another…
- Do you like taking big risks? If you don’t mind losing your own house, real estate could prove lucrative for you!
- Are you just looking to diversify your portfolio? If so, this might be a good option for you after all!
Alternatives To Real Estate Investing?
Yes, there are plenty of other business models to choose from if you want to pursue this making money online. Here are just a few:
Is Real Estate Investing A Scam?
Time for the $1,000,000 question: is Real Estate Investing actually a scam?
I wouldn’t technically call it a scam, though others might.
It’s technically possible to make money with this program, so in that sense, it isn’t a scam.
No one is riding off into the sunset with your money, leaving you empty-handed… technically speaking.
But the second, more important question is: is Real Estate Investing actually worth the investment?
My honest answer is that for most people out there, probably not.
There are countless other business models that are proven & easily scalable, so why risk it for… not an incredibly huge payoff?
I’d rather have a program with thousands of successful students & plenty of room for others to join.
If you’ve followed my blog for long, you know I recommend a few different programs depending on your skills & goals.
My current top choice is becoming a Digital Landlord, because you have a proven, systematic path to 6-figures, and you can do it from anywhere you want.
I’ve got friends in there posting deals from the middle of the woods in a camper-van with their pet pig… which is cool.
What Is My Top Recommendation For Making Money Online In 2022?
Alright, time for me to get real with my lovely readers for a moment:
I’ve personally tried all of the major online business models:
- I’ve sold fidget spinners through Amazon FBA
- I’ve dropshipped a toilet bowl putting green on Shopify
- I’ve sold women’s health supplements via Clickbank affiliate marketing
And I made money with all of them, so trust me when I say: there is no “perfect” business model.
THAT BEING SAID: I would at least recommend you implement something that is tried and true, because I’ve seen TOO MANY people (including friends and family) get burned by stuff like becoming a Real Estate Investor.
They come out of left field with some random idea, make it seem attractive, and then make themselves a quick buck by luring in unsuspecting people.
I’m not saying Real Estate Investing itself is a piece of trash, I’m just saying you need to be very, very careful.
This is a big reason why I only recommend proven, tried and true business models, like Lead Generation & Ad Agencies.
There are a bunch of programs out there that teach you those skills, but my top choice is the Digital Landlords program.
Why? It has proven leaders with their own 7-figure businesses implementing exactly what they teach you.
I’ve also got over a dozen personal friends in there, so I feel comfortable telling you it works.
Whether you’re a complete newbie, or you’ve been around the block before but have never had that “big win” to propel you forward, their program works.
1)Time: If you’ve got a spare hour-or-two each day, you can do this. If you want to drop everything and go all-in, you can do this. More time obviously means faster results, but even putting in a few hours per day is enough to see real success.
And because of that flexibility, you don’t need to trade your time for money. Once the income starts, it’s recurring (for the most part).
That means you can take a month off, travel the country, pursue a passion project, chill on the beach, or charter a boat across the world.
But you can only do that once you’ve created an income stream that doesn’t require YOU to be there all day, every day.
2)Big Margins: With most businesses, you’re often going to have really slim margins. That means you need to hit a serious scale to make serious money.
Being a Digital Landlord, your profit margin is nearly 100%. Watch here to learn how.
Just a reminder: these Digital Rental Properties are worth (at a minimum) $500/mo in semi-passive income. And each time you create another one, your income increases, and the effort put into creating the next property decreases.
Best-case scenario, you have properties bringing in over $3,000+/mo on “auto-pilot.”
3)It’s Effectively Copy-Paste: Here’s my favorite part: once you have your first Digital Rental Property up, you can literally copy-paste another version of it and find another willing “renter” in a few days. DOUBLING your income doesn’t get much easier than that…
If you wanted to double your income with Real Estate Investing, you would need buy an investment property for cashflow And I can guarantee you, that’s a lot harder than a few clicks & a phone call.
4)You’re Helping REAL People: My biggest gripe with real estate investing is that you’re basically only helping yourself.
But when you’re a Digital Landlord, you’re helping solve REAL problems that people are ASKING for help with:
Small local businesses around the world need one thing: customers. Without them, their business would fall apart. If you can provide those customers, they’re going to be really happy – and they’re going to pay you for it.
You’re helping a struggling mother or father put food on the table for their families, put their kids through college, or simply live life a little bit more comfortably.
Having this type of impact on the world is what will help you sleep soundly at night.
So, the rest is up to you. You could keep looking at other off-the-wall business models like Real Estate Investing and maybe hit it big one day.
You could keep researching and researching for the next few months (or few years), never making a concrete decision.
OR, you can look deep inside, think about those dreams, hopes, & desires, and make the decision to ACTUALLY make it happen, just like it has for thousands of other students before you.
Making a fortune while actually helping real people that need it.
If this sounds like you, click here to see how it all works.