Armani Murphy - Real Estate Investing--How to Create Wealth & Passive Income With Rental Income

Have you ever dreamed of owning a property portfolio and relaxing in the sun while the business takes care of itself? Do you tell yourself its the sort of thing that happens to others not you?

Perhaps youve thought about real estate investing but are worried its too complicated, or you just cant afford it.

Ive got good news for you! If youve bought or want to buy a house to live in, youre already a real estate investor.

Of course, its complicated, but thats only because those already doing it dont want you having a slice of their pie. If youre prepared to spend a little time understanding the process of real estate investing and securing finance for your first property, then you can become a real estate investor.

Owning an investment property is exciting, it can also be surprisingly lucrative. You just need to read this guide and start implementing the simple steps that will turn you into a property investor.

Thats whats so great about real estate investing, anyone can do it. In fact, studies estimate that in excess of 28 million Americans are residential real estate investors . If they can all achieve success in owning property, then so can you!

Its time to let yourself get excited and discover the possibilities connected to real estate investing.

T he main reason real estate investing seems complicated is because there are several different options for investing, and you need to choose one to get you started. Of course, finance is important, but well take a look at that in the next chapter.

There are 4 main ways of investing in real estate. Even if you already know your preferred route in, you should be aware of the options that are open to you.

Buy To Rent

The basic principle is to purchase a property and rent it out. For many first-time real estate investors, this is the logical starting point because it seems like the simplest to understand.

Room Rental

The easiest way into this type of investing is to rent out a room in your current property. This is real estate investing at its lowest level. But, youll earn additional funds which can help with the next stage of your investment. Of course, if you have more than one room available you can rent all of them to multiple occupants.

In fact, this is a great way of generating funds while studying at university. If you can purchase a property and rent the rooms out to fellow students, you should at least cover the cost of the property, giving you free accommodation.

Rental Properties

The longer-term aim is to purchase a property just for renting. You will need to have a sizeable deposit available for your purchase. Again, check out the next chapter for the best ways to raise funds. While a conventional residential mortgage can be had with a 5% deposit, the norm when purchasing a property to rent is 20-25%.

Obviously the lower the property price, the less the down payment. Thats why many first-time investors look at properties in need of work. This will reduce the price of the property but, youll need to invest time and money into renovating the property.

Dont forget that, while youre renovating, the property isnt earning you any money and you will be spending money on it. Youll still need to pay the finance during this time.

In addition, youll need to be prepared to deal with unanticipated issues. On the plus side, most expenses are tax-deductible and you should be able to secure a regular income.

But, you should also be aware that some tenants can damage your property and be very demanding regarding repairs. This can destroy any profit you make.

A final point to consider when thinking about investing in a rental property is that in the long-term, the property will be paid for. Then it can generate a healthy income or be sold to release funds.

Flipping

If the hassle of tenants is a little too daunting for your first real estate investment then you can try flipping instead.

This is when you look specifically for a property that needs renovation work. Once youve done the work you sell the property and purchase another one, to do the same again. The idea is that you make a profit from each flip.

You will need to pay careful attention to the asking price, the potential selling price, and the cost of the work involved. At all times you need to remember youre flipping the property, which means making it desirable to a wide number of buyers. Youll want to avoid personalizing the project.

Again, youre going to need a substantial downpayment to get you started. However, if youre planning on living in the property while you renovate it you may be able to qualify for conventional finance. This will reduce the downpayment needed.

You should note that it is very easy to get the value of the property and the repairs needed wrong. You need to have experience regarding the time and cost of renovating. This will help you to establish a maximum price youll pay for the property and a minimum, realistic, selling price.

If you dont have experience with renovating and repairs, its a good idea to get some expert help. This can help you avoid purchasing a property that will lose you money.

Your aim is to flip the property as quickly as possible, this reduces the interest you have to pay on finance. Potentially more importantly, if you get the real estate investment right, you can make a significant sum of money in a short space of time.

However, you do need to be aware of market conditions. The best market is one where house prices are rising. Youll be able to purchase low because the property needs work. Providing you do the renovations to a high standard, youll be able to sell high.