Few Industries Are Better for First-Time Investors Than Real Estate. Here Are 4 Proven Ways to Make a Profit.

When it comes to investing, few sectors offer the level of profitability and stability that residential real estate does. For first-time investors, this venture can be a powerful tool to generate income and accumulate wealth.

The real estate market, particularly the residential sector, has consistently proven to be a solid investment choice. According to the Federal Reserve's report on consumer finances, the primary residence accounts for about one-quarter of all wealth among U.S. households as of 2020. Additionally, a study by the National Association of Realtors found that in 2020, despite the challenges of the global pandemic, the median sales price of houses sold in the United States still saw an increase of 6.7%. These stats underline the remarkable resilience and profitability of the residential real estate market.

When you consider investing, it's hard to overlook residential real estate's dual advantages — steady cash flow through rentals and potential asset appreciation over time. Furthermore, real estate investment has a long-standing history of being a hedge against inflation. As living costs rise, so does the value of properties and rental income, providing real estate investors with a level of protection against the dollar's declining purchasing power.

For first-time investors, investing in residential real estate can be a powerful tool to generate income, accumulate wealth and diversify an investment portfolio. And while the venture might seem daunting at first glance, there are several accessible strategies that can maximize profitability and mitigate risk. Armed with these strategies and a solid understanding of the market, you'll be well-positioned to reap the rewards of real estate investment.

Related: Why Savvy Investors Prefer Investing in Real Estate Over Equities

House hacking involves purchasing a multi-unit property, living in one unit and renting out the others. The tenants' rent can cover your mortgage and even provide some extra income.

For example, if you purchase a triplex for $300,000 with a monthly mortgage payment of $1,500, and you rent out each of the two units for $800, you're receiving $1,600 in rent. You're effectively living for free and making a $100 profit each month.

Start with market research to look for multi-unit properties in areas with high rental demand. Financial planning is critical here; ensure you have a solid credit score to secure a favorable mortgage rate. Once you've acquired the property, you'll have to be ready to take on landlord duties such as rent collection, maintenance and conflict resolution. If you're not comfortable with these tasks, consider hiring a property management company.

Long-term rentals can provide a consistent cash flow while also building equity over time. As a landlord, you can profit from rent payments and property appreciation.

Consider a $200,000 property that rents for $1,200 per month. After expenses (mortgage, insurance, taxes, maintenance), you might net $200 per month. Over the course of a year, that's $2,400 in cash flow. Plus, as you pay down the mortgage and the property appreciates, your wealth grows.

For long-term rentals, the location is key. You need to choose areas with strong rental markets, considering factors like job growth, population growth and economic stability. When it comes to financing, it's crucial to obtain a mortgage that allows you to generate a positive cash flow. Once you have tenants, you'll need to manage tenant relations and property upkeep.

Related: 7 of the Most Common Mistakes Made By Beginner Real Estate Investors

Fix-and-flip is a more short-term investment strategy. This involves buying a property in need of work, renovating it and selling it for a profit.

For instance, you might buy a distressed property for $100,000, invest $30,000 in renovations and then sell it for $170,000. After closing costs and expenses, you could net a substantial profit.

With the fix-and-flip strategy, your first step should be finding a good deal on a property. Look for distressed properties sold below market value. You might need to work with real estate wholesalers or scour foreclosure listings. Budgeting is also crucial. Accurately estimate your renovation costs and potential resale value to ensure profitability. Lastly, you'll need to manage the renovation process, overseeing contractors or even doing some of the work yourself if you're skilled in that area.

The rise of platforms like Airbnb and VRBO makes short-term vacation rentals an attractive investment strategy. These properties can generate higher income than traditional rentals due to their per-night pricing model.

For example, a beachfront condo might rent for $1,500 per month long-term. But as a vacation rental, it might fetch $150 per night. If you rent it for just half the month, you're already making twice as much.

Location is everything for short-term vacation properties. Choose a property in a high-demand vacation area, considering factors like tourist attractions, seasonality and local regulations. Once you've acquired the property, you'll need to market it effectively. Listing your property on popular short-term rental platforms and investing in professional photography can help attract guests. Lastly, be prepared to handle frequent guest turnover or consider hiring a property management company that specializes in short-term rentals.

Residential real estate offers an array of profitable strategies for first-time investors. By understanding and leveraging these methods, you can create a robust and profitable investment portfolio. Each strategy — house hacking, long-term rentals, fix-and-flip and short-term vacation rentals — has its unique set of benefits and considerations.

Related: 5 Proven Steps to Become a Real Estate Millionaire, According to an Investor

The secret to success in residential real estate investing isn't much of a secret at all. It's about diligent research, careful planning and strategic execution. By following the actionable steps provided in this article, you'll be well-positioned to profit from your first residential real estate investment. However, remember that every investment carries risk, and it's essential to thoroughly understand these risks before jumping in. Start small, learn as you go and scale up as you become more comfortable and experienced. With patience and persistence, your real estate investments can be a significant source of income and wealth accumulation over time.

MPRE Master of Planning with Real Estate / Course details

MPRE (Master of Planning and Real Estate) is a four-year enhanced undergraduate degree which is fully accredited by both the Royal Town Planning Institute (RTPI) and the Royal Institution of Chartered Surveyors (RICS).

The curriculum for the first three years is the same as our BSc (Hons) Planning and Real Estate, in which you will consider the issues faced by professionals in dealing with the planning, development, and management of all aspects of our built and natural environments.

The fourth year of study is at taught master's level and provides professional training in planning and real estate, serving as a fast-track to your future career. You always have the option to switch between the degree programmes with the final ‘integrated Masters' year so you can transfer on or off the four-year programme during any stage of your studies.

Effective planning, development, and management of our cities, towns, and natural environment is crucial in an age when governments and societies all over the world are struggling to deliver sustainable development.

Understanding and engaging with the opportunities and challenges facing the communities and places in which we live, work, and play is at the heart of what we do in the department of Planning and Environmental Management at The University of Manchester.

The integrated Master of Planning and Real Estate (MPRE) satisfies the spatial planning curricula for the RTPI and is therefore the fastest route to Licentiate Membership, which is highly valued by employers. The degree is also dual accredited, as it is recognised by the RICS Planning and Development and Commercial Real Estate and Valuation pathways.

Manchester is a great place to study planning.

It is a major UK city undergoing rapid urban change, which provides an ideal base for exploring urban development pressures and how these shape economic, social, and environmental futures.

Developing an appreciation of the interaction of people, the economy, and the politics of development are central to this process and your studies in Manchester.

The city is also ideally placed for you to learn about a wide variety of rural environments which have significant implications for planning and real estate markets, including three spectacular National Parks, areas of intensive farming, and impressive coastlines.

Accreditation

This course is fully accredited by the Royal Town Planning Institute (RTPI). It is also accredited by the Royal Institution of Chartered Surveyors (RICS) under two pathways; ‘Planning & Development' and ‘Commercial Property and Valuation'. - This means you'll be ideally placed for a professional career in planning or real estate after you graduate.

Local fieldwork

Conduct fieldwork on a local scale, exploring the city of Manchester and its surrounding areas to supplement your studies and exams.

International fieldwork

This course normally includes a field trip to a European country during your second year, where you can put what you have learnt so far into practice. You will also have the option to attend a field visit abroad in your fourth and final year.

Study abroad

Apply to spend one semester studying abroad at one of our exchange partners in Europe, the US, South East Asia, or Australia.

We combine traditional lecture-based teaching with tutorials, seminars and workshop sessions.

Practical and digital skills, such as Geographic Information System (GIS), Adobe Photoshop and Adobe Illustrator - as well as general computer skills - are taught in university computer suites.

This work is accompanied by group work in tutorials and workshops, as well as standard lectures, giving you an overall hands-on learning experience.

Project-based learning, incorporating applied design work, field research and study visits are integral to our BSc PRE course.

These projects provide an excellent opportunity for you to integrate your knowledge and skills and apply them to real situations - exposing you to professional practice.

Important notice

The School of Environment, Education and Development (SEED) recognises the value of fieldwork.

However, the safety and wellbeing of our students and staff remains our priority. The School will assess on a regular basis the viability of any travel and fieldwork and communicate any significant changes to our students at the earliest possible opportunity.

The ability of fieldwork and travel to proceed, and whether any changes to proposed fieldwork and travel might be necessary, will remain subject to factors such as the:

All fieldwork and travel will be subject to a rigorous risk exam process and the implementation of any protective measures identified by the risk exam to ensure the health and safety of all our students and staff.

In some circumstances, it may become necessary to make changes to fieldwork or programme related travel. The University will notify you of those changes at the earliest opportunity.

If any fieldwork does not go ahead as planned, then the School's focus will be on seeking to offer a suitable alternative and ensure that the Intended Learning Outcomes (ILOs) of the programme are met.

Please note that countries may change their immigration and visa regulations at short notice. The School cannot guarantee that where visas are required for fieldwork, they will be granted but we will take steps so that if a visa is refused, affected students are not academically disadvantaged.

We place strong emphasis on coursework and continuous exam.

Coursework takes a variety of forms - from essays and reports, to posters, oral presentationsand project demonstrations (sometimes to practising professionals).

We also incorporate lots of opportunities for feedback on non-assessed work so that you can be confident about your progress.

Your dissertation, which takes place in the third year, will draw together the different strands of the course and allow you to study a subject that really interests you.

You will work with an individual supervisor to conceive, plan, execute and write up an independent and novel piece of research.

Year 1 provides a broad introduction to the fundamentals of planning and real estate, including introducing core principles and practices that underpin urban development, real estate and urban economics, placemaking and sustainable communities.

You will use Manchester as your ‘living laboratory' seeing the opportunities and challenges of fast-paced development in an internationally famous, vibrant city.

The course unit details given below are subject to change, and are the latest example of the curriculum available on this course of study.

In Year 2, you will begin to specialise your knowledge and skills. This includes understanding policies, regulations and processes that guide development, introducing core principles on urban design and understanding how to value properties.

This year also provides you with an opportunity to start tailoring your degree to your specific interests with optional course units and gaining some work experience through taking an optional short-term placement.

You can also normally apply to spend one semester studying abroad at one of our exchange partners in Europe, North America, South East Asia and Australia.

Year 2 also starts to develop your skills in collecting and analysing data ready for conducting independent research in your third year (fourth with placement). As part of this, the course normally includes a residential field visit to a European country where you can apply your learning in a different context.

The course unit details given below are subject to change, and are the latest example of the curriculum available on this course of study.

In Year 3, you will develop further specialism. 

You will focus on career development and applying the planning concepts and skills to real-world situations.  

You will also undertake a dissertation on a topic of your choice to put your knowledge into practice.

The course unit details given below are subject to change, and are the latest example of the curriculum available on this course of study.

In Year 4 [Year 5 with Professional Placement] you transition into the integrated Masters, where all the content is taught at master's level.

This is your professional ‘specialism' year, and is currently required by the RTPI to receive full accreditation, serving as a fast-track to a future career in planning.

You can choose optional specialisms in spatial planning, environmental planning, urban design, real estate, digital planning, or international planning.

In this year, you also normally have the option to take a short, 4 week placement, giving you further opportunities to enhance your CV with hands on experience of working for organisations specialising in planning or real estate.

The course unit details given below are subject to change, and are the latest example of the curriculum available on this course of study.

You can develop your digital planning skills in our computer suites with specialist design and spatial analysis software.

See facilities  for more information.

Practical support and advice for current students and applicants is available from the Disability Advisory and Support Service.

For more information, email dass@manchester.ac.uk