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Are you wondering how you can become a millionaire with real estate? Over the years, people have gotten their start in real estate investing in different ways. Some have rented out parts of their homes, lived with their families a little longer, and worked extra hours to save some money to start investing. No matter what method you use to make it work, know that your effort is worth it. There are different ways you can save money to start investing in real estate. You just have to pick one and start. Here are three main approaches you can take:
1. Buy and hold. This is the most traditional way and what I usually recommend to my clients, mainly because you don’t need a huge down payment and there’s a low barrier to entry. You’ll start with your primary residence and turn it into a long-term rental for three years with a tenant. We own two properties purchased with 3.5% down FHA loans, so we didn’t need a huge amount of money to get into this. I prefer this method and recommend it to my clients who are starting without a lot of capital.
2. Flipping. Flipping in our market is a bit more challenging than it used to be. The best flips are the ones that you can buy at the lowest price possible, which is tough to do in Phoenix nowadays. Flipping is a great way to buy a property and invest money in upgrades and renovations before selling it at a higher price. Maximize your profits by getting the property for as low a price as possible. This is because there is a maximum price you can sell it for—you can’t sell it for more than it’s worth or more than other comparable properties in the neighborhood.
3. Long or short-term rentals. You can buy a property with the sole intention of placing a long-term renter in it. However, you need to provide a larger down payment, generally 20% to 25%. This is why it’s not my recommended way to start unless you’re an experienced investor or have a lot of cash.
You can also make it a short-term rental and list it on Airbnb or VRBO. Pick a property in vacation spots to maximize the profits of your rental. Phoenix is a great market, although it’s not necessarily a prime vacation destination. Scottsdale is highly sought-after, but Phoenix offers enough amenities. We have hospitals that people come to from all around the world, or at least all around the country. Depending on where you are, it might not be the best approach, but it’s still worth looking into. There are resources you can use to find out whether your area would be a good fit for a short-term rental. Contact me, and I’ll let you know what they are.
Also, flipping and long- or short-term rentals require more capital upfront. However, there are different ways to go about that—you can use your own money or borrow from hard-money lenders, family, or friends.
If you’re interested in getting into rental real estate investing, give me a call. My number is (602) 540-6250. I’d love to talk to you and create a game plan for how we can invest in real estate together.
Want to work with me? Here are some ways to get involved.
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