Here’s how you can begin your real estate investment journey.
Today I want to go over a few of the different types of investments you can make in the real estate world.
One of the most common investments is buying a turnkey property. It could be a condo, house, or four-unit building. There’s no deferred maintenance and no renovations to be done. You’re simply buying a property that already has tenants and benefits from long-term appreciation and monthly cash flow. It’s a great investment.
Another type of purchase you can make is buying a property with deferred maintenance. These are properties that need a little bit of work upfront to rent them out. If you’re buying one of these, you’re going to have to plan to do that work in the short term. It’s a much more active type of investing than the first option. Hopefully, you’ll get additional benefits in the form of your ROI upfront to justify the work and effort you’re putting in.
“Private lending is the most passive form of investing.”
You could also partner with a builder or developer who has the expertise to build a multi-unit building. Typically, they’ll have already put a project together, and you will just partner with them. They’re looking for the initial capital required to get the property off the ground. When purchasing a piece of land, you would need to bring about $300,000 down or more to benefit from that partnership. This is another passive investment that could create both short- and long-term returns. However, the project will take one to two years to finish, so your capital will be stuck for the duration of that project.
The final type of investment I want to talk about is private lending. This is where you take the position of the lender, the bank. There are people all across the province who need loans and have the necessary funds to buy a home, but for whatever reason, they can’t get approved by the bank, so they look to private lenders. You would either become the first-ranking lien holder or second-ranking lien holder if another bank is involved. This is the most passive form of investing because you just wait for the loan to be paid off. The returns aren’t super high as the first-ranking lien holder. It’s about 8% to 10%. Second-ranking lien holders can expect a 15% to 18% annual return. If all goes smoothly, you have very little work to do.
Why did I choose these four types of investments to talk about? These are the four types of investing that I did when I first got into real estate. I have lots of experience in these types of situations and would love to share it with you. If you have questions about investing in real estate or anything else, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.