Investing in Real Estate for Beginners: A Quick Guide

Real estate investing is a common path to wealth. Real estate properties outpace inflation and provide monthly rental income.

Orlando real estate prices have increased 24 percent year-over-year. These increases don't include cash flow, tax deductions, or any other advantages.

Real estate for beginners can seem daunting, but we'll help you navigate this compelling opportunity. We compiled a quick guide to help you invest in real estate.

Establish Your Criteria

Your criteria guide your investing decisions. This ruleset eliminates properties from consideration, so you focus on fewer choices.

You can set criteria that match price points, ideal locations, square footage, and other variables. These factors influence the cost of each property and the potential reward.

You can buy small properties away from the city to lower costs. This investing parameter helps you buy multiple properties and spread your risk.

Save Up For Your Down Payment

The down payment represents an upfront expense for purchasing real estate in Florida or anywhere else. While the down payment makes real estate more affordable, it's no walk in the park.

Many investors make a 20 percent down payment towards their properties. However, you can reduce your down payment if you have a strong enough credit score.

Anyone putting less than 20 percent down will have to pay PMI until they reach 20 percent equity. A lower down payment percentage expands your pool of investing properties.

Lower down payments also help you accumulate more properties in a shorter time. However, you have to budget for each down payment. You may have to work on a side hustle or ask for a raise.

You should also budget for vacant months. Set aside enough funds to cover a few months of rent just in case you're stuck with the mortgages. Grow at a careful pace to maximize returns while reducing risks.

Flip Or Rent? Real Estate For Beginners

Most real estate investors pick between flipping and renting. Both offer advantages, and you can do both simultaneously.

You can rent one property and flip another. You can also generate rental income for a few years and then decide to flip after the tenant leaves.

Rental properties provide consistent cash flow as long as you have tenants. Flipping provides a large payoff sooner, but it often comes with more work and expenses than rentals.