For many years, real estate has become quite a popular investment to many investors. Through the years, it has provided much financial success to those who invested in it. Some of these include business tycoons who have become wealthy due to their investment in real estate.
They own various properties to use it to make and add more profit to their income. This because real estate provides high and continuous profits to those who are willing to take the risk to invest in it.
Also, Investing in real estate allows you to diversify your portfolio that helps protect your money when the market fluctuates. However, just like other types of investments, Investing in it also has its risk that must be considered.
This is why it essential to provide considerable money, time, and patience when investing in it to make it a success. Below are some tips and tricks to help you to invest in Real Estate.
Ways to Invest in Real Estate
1. Real estate investment trusts (REITs)
A Real estate investment trust (REITs) is a company that operates or owns income-generating real estate properties. They have various types of real estate that range from warehouses and shopping centers to office and apartment buildings.
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Similar to mutual funds or exchange-traded funds, they own various kinds of assets. By purchasing shares of a REIT, Investors earn a consistent share of the income that is produced by those assets.
Investors that want to wade into real estate should invest in Real estate investment trusts (REITs) as it provides an introduction to the market minus the time and cost commitment of buying your own property.
A big selling point of REITs is that most of it is traded public stock exchange. As a result, it allows investors to both own and earn profit with ease and liquidity of investing in stocks from a real estate property.
2. Real estate crowdfunding
Real estate crowdfunding is a type of method that lets enterprises to increase capital from large groups of individuals. It is accomplished by using online platforms that serve as a marketplace to perform transactions between real estate developers and investors.
However, some real estate crowdfunding platforms are not available to everyone. This is because most of it is set aside for accredited investors who are highly experienced individuals or have a high net worth. Regardless, there are still platforms that let newbies invest their funds for a minimum cost. An example of these is Fundrise and RealtyMogul.
By using these platforms, you can do various actions such as:
- Create an account or select a portfolio strategy that is based on what goals you want.
- Browse and choose investments for yourself
- Track progress through a 24/7 online dashboard
3. Real estate limited partnerships
Real estate limited partnerships, also known as RELP, is another type of real estate investment wherein groups of investors pool their money or funds to buy or develop a real estate property that would be difficult to afford or manage when done independently.
They are quite similar to Real estate investment trusts (REITs) as they both have a bunch of properties. However, they differ in terms of organizations and structures. In contrast, RELPs can’t be traded on public exchanges as they are private equities.
Rather, they can be set by terms in which it can usually last between seven and twelve years. During these periods, it works like a small company wherein it creates a business plan and identifies properties that can be purchased, developed, or managed so that they can be finally sold with profits distributed continuously.
4. Turn into a Landlord.
The most common and classic way to invest in real estate is to become a landlord by purchasing a property and renting it out to other people. There are many ways to become a landlord:
- Purchasing a single-family home to rent out. This type of strategy can generate income when the overhead cost is minimal. Make sure that the tenant`s rental payment can cover the mortgage, insurance, taxes, and maintenance of the property, if not, then you’re just losing money.
- House Hacking: House hacking as the name implies is hacking or sectioning a part of your property to rent out while you live in the other remaining part of the property. This type of strategy allows you to reduce your living expenses while also generating income that can cover payment, taxes and mortgages of your property.