Your first foray into real estate investing is one of the most exciting times of your life, but without the proper research and knowledge, it can also cause some serious anxiety. Some properties are better suited for first-time investors than others, so if you’re wondering where to start for the best introduction to real estate, there are two options for you to consider: fix-and-flip investing and rentals. 

First Time Fix-and-Flip

Fix-and-flip investing is based on a simple premise: you purchase a distressed or outdated property, perform renovations and updates, then sell the property for a profit. For a first-timer, a single-family home is by far the best option, and you’ll want to find a home in an area where the demand is high enough to facilitate a timely sale, but not so high that you will overpay for the property in the first place. Ideally, you should work with a real estate agent in your local area – one that you are very familiar with – to obtain a property with a great underlying structure and lots of potential. This way, you won’t overspend on renovations. 

Funding a fix-and-flip project is fairly straightforward if you choose a reputable private lender. A bridge loan is designed for this specific purpose, and it’s one of the most affordable options available. Essentially, you borrow the money you need to buy the property and renovate it with the goal of repaying it in full when the home sells. The usual term is 12 to 18 months, which gives you the time you need to carry out repairs, put the home on the market, and close on the sale. 

First-Time Rental Property

Renting a home is an exciting alternative to fix-and-flip investing. Instead of fixing and selling a home for profit, you will instead fix the home and rent it out to a tenant. Once again, single-family homes are the best option for first-timers, especially if you have never rented a home and served as a landlord. There is potential for significant income, but because you’re only renting to one tenant or family, the risk is marginal. It’s important to understand the laws in your local area, including landlords’ and tenants’ rights, before you jump into rental investments. 

Private lenders also offer rental loans that are tailored to this purpose. Like the mortgage on your primary residence, a rental loan is a first-lien mortgage secured by the rental property. These loans cover single-family homes as well as condos and two- to four-unit residential properties. Furthermore, private lenders look at more than your income and credit; they consider the profitability of the property, and they also work hard to process your application and provide you with funds in as little as 14 days.

Rentals and fix-and-flip projects are both perfect for first-time real estate investors who are interested in making their first foray into the industry. While the former offers long-term experience in landlording and tenant management, the second is a much shorter obligation. Either one has the potential for serious profits, so choose the one that appeals to you and start reaching out to lenders today.