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This is a guest post from David Pere, the real estate investor, podcaster, and blogger over at From Military to Millionaire. David is heavily involved in the real estate investing world, something that I know very little about, so I invited him to share what he knows about real estate investing in the military.
If you're on active duty in the military or you were in the military and want to start making money through real estate, I have good news for you:
It's entirely possible to invest in real estate while on active duty.
Real estate investing while in the military is a great way to earn passive income and take advantage of property appreciation. It's not a get rich quick scheme (for what it's worth, those never work).
Instead, it's a tried-and-tested way to achieve long-term financial independence. It's a way to send your kids to college and provide a stable life for your family, no matter what happens in the future.
Before diving into this topic further, it's worth mentioning that you need first to have a long-term vision for your investments.
- Do you want to have a stable cash flow per month?
- Do you want to invest in hot markets to take advantage of significant property price increases?
- Are you looking to provide for your kids' college in 18 years, or are you looking to build retirement income?
These types of questions will guide your decisions when it comes to investing. By determining what you want out of your investments, you'll have a clear understanding of what investments to make.
With that said, it is easy to start investing in real estate if you want to do so. Here are five ways you can get started on your real estate investment journey today.
Invest In Real Estate-Based Products
If you are beginning to invest in real estate, there is a good chance that you don't have a substantial amount of money lying around. The good news is that nowadays you don't need a lot of money to get started investing in anything, including real estate.
Many platforms offer real estate-based investment products that allow you to have some of the returns of real estate without the headache.
Fundrise is a popular platform that allows you to invest in different commercial and large-scale residential real estate ventures. The minimum portfolio investment is $500, so it's an excellent way for people to get a feel for investing in real estate without all the risks.
The platform allows you to select from different projects (or a blend of projects). As with most real estate deals, you'll receive dividends and appreciation on your investment. It's a great way to get started with real estate investing if you have never done any before.
Another way to invest in real estate is to buy REITs on the stock market. Real estate investments back these exchange-traded funds (ETFs). They frequently have substantial dividends (3% or more), which makes them excellent for long-term plays. Now, you won't get rich overnight by investing in these, but, again, they are good ways to learn more about real estate investing in general.
Buy A Property to Rent Out
You can buy a property to rent. Now, that's not quite as simple than it sounds. Buying a property involves a lot of legwork. You'll need first to determine where you want the property to be.
A lot of people choose areas with familiarity, like a place from childhood or a location near an active duty post. As long as you know that it is a beautiful area that will retain its value and has long-term rental potential, it's an excellent candidate for a rental property.
If you are an active duty member, you know how unpredictable life can be. No matter what property you buy, you'll probably want to have a property management company handle it.
These companies will manage all the rental agreements, provide an on-call number if things go wrong, and will even find tenants for you. A property manager is critical for anyone in the military as you cannot count on being close enough to the property at any given point in time to manage it yourself.
You will need a sizable down payment as you won't be able to take advantage of either VA or FHA loans since those require the property to be your principal residence. Therefore, you would only be able to invest if you can obtain financing via a conventional mortgage or if you had enough money to buy the property cash.
Buy A Home to Flip
We've all seen the TV shows about flipping houses. Flip or Flop is an excellent example of such a show. While they make flipping houses look easy, the reality is a lot more nuanced. Flipping is hard work, but that's not to say it's impossible (or that it cannot be profitable).
If you (or your spouse) are handy around the home, flipping is not a bad alternative. You can buy foreclosed homes that are in distress and fix them up for a nice profit. On my site right now, you'll see a current project of a two-bedroom, one-bath home that I bought for $11,900.
That's a reasonably small investment. I'm estimating $50,000 worth of repairs and a final sales price of around $95,000. After closing costs and commissions, I still should make approximately $30,000 on this flip.
If you're patient, willing to wait for the right deals, and can do much of the work yourself, flipping is a great way to start earning money from real estate.
Also, the VA home loan is an amazing tool in our toolbox!
Partner on A Property
Many real estate investors, partner on more complex properties. While this method of investing requires more capital, it can allow you to be part of bolder projects with a higher return on investment.
People buy and rehabilitate larger multi-unit dwellings. These might be $3 million for a single buyer, but by having a few investors, the company reduces their risk, and it provides you an opportunity to make money.
You'll need to do your due diligence to make sure the investment is as good as it sounds, but partnering on a larger project can be a great way to earn a high return in real estate.
Learn and Read About Real Estate Investing
Sometimes an investment isn't about dollars, but rather time. If you aren't ready to commit your hard-earned money to any of the investment types above, consider committing to learning more about real estate investing.
Commit to subscribing to a podcast about using real estate for wealth building.
Commit to reading books on flipping houses and the experiences that real flippers have.
A commitment needn't be financial to be meaningful. By learning how real estate investing works, you're developing an understanding of how it can be beneficial for both you and your family. Then when you do feel comfortable enough to act, you'll make better decisions!
My Point Is Simple: Act Now
“Analysis paralysis” is a term that describes someone who is so overwhelmed with possibilities that they choose nothing. Instead of taking a direction and going with it, they spin in circles.
Real estate investing does build wealth, whether you're in the military or not. Consider buying a home to rent or flip. If you'd prefer, you can partner with an investor on a larger project. If investing that much money isn't desirable right now, you can try buying REITs or a real estate investment platform like Fundrise. Or, if you are not ready to commit money to real estate just yet, you can learn more about the topic.
No matter what your risk tolerance is, there is something you can do today to begin your real estate investment journey. Don't wait! Real estate investments often play a role in a comprehensive strategy for going from the military to a millionaire! Take action today!