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This post was written in partnership with Diversyfund.
According to best-selling author Robert Kiyosaki, “Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth”. If you’re wondering how to get started with real estate, you’ve come to the right place!
After nearly a decade in retail banking, I became licensed to sell real estate. Fun fact about getting your real estate license is that a college degree isn’t necessary, and your earning potential is limitless!
Real Estate Investing for Beginners
Did you know that you can invest in real estate with as little as $500? There are a couple of ways to achieve this from crowdfunded real estate to REITs and wholesaling properties.
What is Diversyfund?
Diversyfund removes the middle man, saving you expensive broker fees and allowing you to get the most out of your investment. The company actively manages real estate investments so you don’t have to.
Diversyfund takes investors’ money, purchases real estate, renovates it and then resells for a profit. The earnings have consistently been 6-8x higher than typical high yield savings accounts available today.
For reference, here are some current savings rates:
- CIT Bank Savings Builder
- Empower Checking and Savings
We once became landlords out of necessity when we moved out of state, and I can tell you from experience that managing rental properties (even just one) can be a massive pain. This is especially true when you live across the country in a different state.
Diversyfund gives you the opportunity to invest in real estate with ease. You can start a Diversyfund growth REIT with as little as $500, and your money is diversified across a portfolio of real estate investments. 2018 average annualized return was over 17%
Investing in real estate isn’t exclusively for the 1%! Now it’s your turn to realize some of the earnings that President Donald Trump and Grant Cardone have!
Investing in Crowdfunded Real Estate
Crowdfunded real estateis very similar to the REITs listed above in that it’s an alternative way for multiple investors to pool their money to buy properties. Some crowdfunding options include:
ArborCrowd – Only offered to high-net-worth investors $1M+
RealCrowd – $25,000 minimum investment required
CrowdStreet- $25,000 minimum
PeerStreet- $1,000 minimum
RealtyMogul- Offers different levels of investing depending on risk tolerance
As you can see, crowdfunded real estate can be the answer to how to get started in real estate if you have a bit more money to invest.
Real Estate Wholesaling
Real estate wholesaling consists of a buyer entering into a contract with a seller to purchase his property and then marketing and reassigning that contract to potential buyers.
The wholesaler then pockets the difference between the original purchase price and the amount paid by the buyer. This can be a risky game, though, if you aren’t able to find a buyer before the contract is set to close.
Here’s how it works:
A wholesaler finds a fixer-upper and offers to purchase at $100,000. The home needs approximately $30,000 in repairs but he estimates the home will sell for $160,000 once it’s all said and done. He finds an investor to purchase the home from him for $110,000. He earned $10,000 on the deal without ever actually owning the home.
Related Articles on How to Get Started in Real Estate:
- The Many Pros and Few Cons of Real Estate
- First Year Real Estate Agent Salary {Action Steps to Maximize Income}
- Fundrise vs Diversyfund: Should You Invest in Crowdfunded Real Estate or REITs in 2019?
- Real Estate Desk Fees & Transaction Fees, and Their Impact on Income
- Real Broker LLC | Realtors Review The Virtual Real Estate Brokerage
How to Get Licensed in Real Estate Plus Startup Costs
As I mentioned earlier, I was in retail banking, working for Wells Fargo, when I decided enough was enough. I was tired of working “for the man” and wanted to own my own business. I wanted freedom with my schedule, the ability to take off when I needed to without guilt, and the ability to write my own paychecks.
There are seven steps to becoming licensed to sell real estate:
- Get familiar with your state licensing requirements – Look up your local real estate licensing requirements. Every state is different, so you want to know exactly what it takes to get started.
- Take a pre-licensing course – My course was online, and I went through the modules while I was still working at the bank. Remember that you’ll be going to 1099 independent contractor, and there is no salary income. It’ll likely be at least a couple of months before you close on your first home sale.
- Take (and pass) your State exam and the National exam.
- File and pay the necessary real estate license application fee.
- Join the National Association of Realtors along with your local board of Realtors – This is usually non-negotiable with local boards. This is also the majority of your startup costs. Be sure to ask your local board how much fees are and how much are recurring (monthly or quarterly).
- Research and choose your brokerage.
- Set aside money for taxes from the beginning! When I earned $50,000 my first year as an agent in Illinois, I failed to save for taxes. Budgeting for taxes is definitely something you don’t want to overlook. Don’t be like me. Plan ahead!
Choosing a Real Estate Brokerage
Every licensed Realtor must have a managing broker “hold” her license. This company is responsible for verifying licensing of all agents, providing training and support for agents, making sure agents and companies are compliant and legal, etc.
When I first became licensed, I only interviewed one brokerage. It was Exit Success Realty in Warner Robins, Georgia, and they aren’t even in business anymore.
Every broker offers different levels of support and training. Some are very hands-off and others are in your office on a daily basis making sure you are doing well.
But not every broker provides an office or working environment for its agents. In other words, there are often hidden fees, such as desk fees and transaction fees that will quickly eat away at your profits as a Realtor if you aren’t careful.
My former broker charges over $1,000 per month as a “desk fee”, but that fee does not include an office space to work. You’re simply paying for their name and training.
That’s why I recommend Real Broker as a virtual real estate brokerage, and they currently hold my own license. I am able to earn more money and I pay $0 in recurring monthly fees.
You can find more info about joining Real here.
Recap: Real Estate Investing vs Selling Real Estate
If you’re looking to just play around with an extra $500-$1000, try out Diversyfund. You can earn nearly 6-8x as much as traditional savings rates are today and start investing like the 1%.
If you have a bit more and would like to try other forms of crowdfunded real estate, I highly recommend checking out the list above.
I shared how to get licensed in real estate, and I truly believe this is one of the best decisions I’ve made career-wise. Starting a career in real estate gives you the freedom to work from home, helping others realize their dreams of homeownership.
It’s a great place to start, and from there, you can buy your first flip and one-by-one, start flipping or investing in rental properties. The sky’s the limit when it comes to real estate investing!
