I’ve written about side hustles previously as a way to generate extra income. If you are still in the trying to figure out what side hustle you are getting into that’s ok. There is a lot to learn.
While you are researching and testing, I suggest you go ahead and prepare yourself mentally for the financial increase that will come your way. Consider what will you do with the extra money besides paying down debt and reinvesting into your business.
Here is a viable route for you as you save up some cash or already have the money, why not invest in real estate as a way to generate extra income and build wealth for yourself.
The rental income is considered passive income. Passive income is money that comes in that you did not earn or work for which is usually treated differently for tax purposes. Please do consult your tax advisor/ CPA on this subject and not rely on my comments as advice because each person’s tax situation is different. Be in the know and be informed.
You can search for property on your own. If you know what you are doing that is great way to find off market deals that may be lower prices homes. Novice investors almost exclusively use Realtors to go look at homes for sale that are in the investment properties category. This is one effective way to purchase rentals.
If you are an inexperienced investor, a Real Estate Agent will help educate you and guide you through the entire purchase process. Since you are the buyer, the services of the Realtor are paid for by the sellers.
When you are considering the purchase of property listed in the MLS aka the multiple listing service which is exclusive for Realtor use, you get a bargain on skills, knowledge, education, training, and expertise available to you the Realtor brings to the table.
I always recommend talking with Realtors for novice investors so that you can understand the entire process of getting an investment property as well as guidance. Not all Realtors have the same skill sets, so you do have to ask some questions to find the right person for you.
Often times in hot areas, the MLS also known as the multiple listing service does not contain bargains for investors. You may have to look else where to real estate deals. More experienced investors do stay in touch with Realtors should the agent come across a sweet deal so the investor gets first chance to purchase those properties before the house hits the market.
A lot of Realtors also buy for their own personal portfolios, so may or may not have a great deal until you run the numbers. The real estate agent can provide you with comparables also known as comps to determine the market value of the home for sale and the rent amount for rentals.
Some investors like to go to the for sale by owner FSBOs as an alternative to what is listed with Realtors to gain access to houses that are not listed in the MLS. Seems like a great idea, but as you start looking at these houses for sale, and their asking prices, you will often times see the sellers have overpriced their homes for sale.
FSBOs represent more issues. Here is why. The homes listed for sell by owners usually have huge emotional attachment to their homes and falsely believe their home is worth more than the market will allow for pricing. These homes are often times over priced because the sellers think their house is worth more than homes that are similar to their home have sold for recently in their area.
Some of theses sellers are testing the market to see if someone will pay more over market price for their home. They truly have no intention of selling. Frequently, these homes need work and or updating. Not a good business decision to over pay for a house that also needs work and updating.
For investment property, you have to make your money going into the deal and do not be reliant on appreciation to occur. Keep the mindset that if appreciation on the property occurs, that is a bonus.
Always keep the mindset that unforeseen events and reasons can prevent the value of the investment from increasing and or cause a decrease in value. One prime example is the economy.
Always do your homework and be knowledge of the area you are buying into. Stay in learning mode. Keep your mind open and be willing to network with other like minded people that are into investing in real estate. A lot of knowledge and deals are shared at these meetings. Find the right group to go to in your area. There are many groups online as well.
Always do your research to “Be In The Know.” ™