Investing in real estate can be a great way to earn supplemental income or grow your net worth, but it can also be a lot of work. But here’s the thing: the biggest driver of real estate investment is not the work that it can require.
So, what is? Capital, plain and simple.
That’s why it’s called investing. And in this post, we’re going to take a look at the easy way to invest in real estate.
Because if you have the money to invest, you should be able to invest.
In particular, the form of real estate investing we’ll take a look at here is the real estate investment property marketplace.
These marketplaces vastly simplify the process of investing while still having a low fee.
When to Start Real Estate Investing
It’s best to be sure you have your own finances in order before you start investing in real estate. That means reducing or eliminating high-interest debt such as credit cards and personal loans. You should also have a dependable income and, hopefully, one that is at least in line with the median for your area.
Taking these steps will help you make down payments on properties and will also show lenders you are capable of paying back a mortgage.
If your income or credit history looks sub-par, you may have trouble being approved for financing.
You’ll also want to start setting aside money since most lenders will require a down payment if you are financing your investment properties.
Once these concerns are addressed, it will be much easier to invest.
What is a Real Estate Investment Property Marketplace?
A real estate investment property marketplace at first looks similar to a site like Zillow or Redfin. However, these investment websites are meant specifically for buying and selling investment properties.
Prospective buyers can browse property listings on the website and find ones that fit their requirements. There are the usual details, such as the address, price, and a photo gallery of the property.
However, because these marketplaces are meant specifically for investment properties, you’ll also find several details you wouldn’t find on other property listing sites.
These include a neighborhood rating, title reports, projected investment performance, and more.
Simplifying the Buying Process
Investment property marketplaces such as Roofstock make the entire buying process much easier.
As mentioned above, there is no particular reason the process should be so disjointed and time-consuming. What matters most is having the financial means to invest.
And that is exactly what an investment property marketplace like Roofstock can do for you. In addition to helping with all of the details above, it also helps you with the following:
- Property inspections
As mentioned above, the site even provides a neighborhood rating. While the company uses its own criteria to determine these ratings, the idea is to give you an idea of the risks and benefits of investing in a given neighborhood.
As they say, location, location, location.
Localized Property Management
One of the biggest benefits of a property marketplace such as Roofstock is localized property management. How does this help? Because it makes it easier to invest in properties in other real estate markets.
Of course, if you want to purchase an investment property in a different part of the country, it will be necessary to work with a property manager. But that can be challenging if you don’t know the market – and the property management companies in the area.
That’s why companies like Roofstock have services such as its Preferred Property Manager program. Through this program, they consider the following for each potential property manager:
- Necessary license in good standing
- Responsiveness & transparency
- Historical portfolio performance
- Preferred pricing for Roofstock customers
- Referrals from the real estate community
- Recognition from trade organizations
- Reporting & data capabilities
- Fee & pricing structure
- Length of time in business
- Market coverage
As you can see, they are quite thorough in finding property managers that will do a great job. The company says it “expects every Preferred Property Management Partner to manage the home as if it was their own.”
Because there is such specific criteria for partnering with property managers, you can be sure you are being paired with one that will do an excellent job.
On the other hand, it would take quite a bit of time to find a property manager on your own that meets these criteria. And that’s not to mention the potential trial-and-error you may have to conduct.
Going above and beyond is important when managing properties because it keeps your tenants happy, which in turn keeps the money coming in.
These marketplaces help you find a great property manager the first time. Plus, they’ll help you find one in any real estate market in which they operate.
Making Remote Investment a Reality
Investing in real estate through a marketplace makes it much easier to invest remotely. Many of the properties are already occupied, so there is to interview potential tenants.
And because the properties are managed by a local property management company, there is no need to physically see the properties, either. Some investors consider this somewhat of a downside as they prefer to see their investment properties.
Nevertheless, this style of investing opens up a whole lot of opportunities. If you live in Lafayette, IN, but want to invest in the San Francisco real estate market, using a real estate investment marketplace makes that a very real possibility.
Making Selling Your Properties a Breeze
Investment property marketplaces don’t just make buying properties easier – they make selling them easier, too.
Again, referencing Roofstock specifically, it removes several of the steps that would normally be involved. The most time-consuming steps are probably answering questions about the property and uploading photos (seriously).
They will then handle several steps that would normally be your responsibility. That includes a property inspection, title report, and gathering key documents.
They then create the property listing for you, saving you even more time. You could also try flipping houses. If you’ve ever wondered how much can you make flipping houses, the answer may surprise you. Many investors usually make a 15% or more return, but It ultimately depends on the type of property, how much work you have to put into it, and other factors. But profits from flipping homes are actually quite high at the moment, so it may be a worthwhile investment for you.
Plus, doing things this way allows you to sell your properties while they are still occupied – to buyers around the country and even around the world. That significantly increases the ease of selling your property.
Should You Use a Real Estate Investment Property Marketplace?
Using an investment property marketplace can be a good idea for many different investors. It allows you to own your own investment properties in any real estate market, and most of the hard work is done for you.
All you have to do is provide the capital.
Of course, there are fees. Roofstock, for example, charges a 0.5% fee or $500 (whichever is greater). However, that is a one-time fee and there are no management fees, as you own the property outright.
The other thing to keep in mind is that you are directly owning real, single-family homes, so you are buying an illiquid investment. On the other hand, real estate provides a nice income on an ongoing basis.
While this style of investing does come with its own set of pros and cons, the biggest question is whether you have the financial means to buy an investment property.
If you do, this style of investment could be a great way to bring in some supplemental income every month.