- January 7, 2022
- Posted by: admin
- Category: Investment
5 WAYS TO INVEST IN REAL ESTATE: Gaining financial freedom is one of the direst needs of every human being walking the face of the earth. You agree that you cannot achieve economic independence by simply saving up bits from your daily or monthly income. However, the best way to financial freedom is to invest—one of the most lucrative and promising forms of investment in Real Estate.
Real estate is a strategic investment plan that caters to the ownership, management, purchase, rental/sale of landed properties to make a profit. While real estate is one of the best ways to diversify your financial source, many factors can limit the profit you make. To subvert these negative factors, you must do thorough research on the best real estate investment platform, learn the nitty-gritty, and learn about its legal aspects.
The estate sector is currently yielding lots of profits for people that have harnessed it, and you don’t want to be left out. Although there are several ways to invest in real estate, this article discusses five of the easiest and most convenient ways to invest in real estate, including their pros and cons.
Offer rental services
Offering rental services is a real estate investment strategy as old as time. This is how it’s done: you purchase a property and rent it out to tenants (As easy as ABC). Automatically, you become the landlord of the property and are also responsible for paying the costs of maintaining and renovating the property. If you know you don’t have significant capital, but you have the patience to manage tenants and maintain properties, offering rental service is the best strategy for you. To get the best out of this strategy, the landlord needs to be actively involved in maintaining the property and your tenants. However, if the duties become straining, you can hire a property manager.
5 WAYS TO INVEST IN REAL ESTATE
- It leverages capital to increase returns on investments (ROI).
- All accrued expenses are tax deductibles.
- An increase in property values yields more profit.
- Generates regular income for the landlord.
- Properties that are vacant for long reduces income.
- Tenants can damage properties and increase maintenance costs.
- Managing tenants can be very exhausting.
Join Real estate Investment Groups (REIGs)
Real estate investment groups consist of people who want to own properties without going through the stress of managing them. Before considering this strategy, you have to consider your finances first because it requires a capital cushion.
In most REIGS, a company buys or builds a set of houses, usually an estate, and allows investors to buy them through the company before gaining access to the group. The company is in charge of maintenance, advertising vacancies, and interviewing tenants. All you, the investor, needs to do is sit back and enjoy the regular income.
- Less tedious when compared to rentals.
- Regular income and might increase with time.
- Vacancy risks.
- Managers might abscond with rent.
For this strategy, a lot of capital is required. Before considering house flipping, you must first be well-versed in the valuation of real estate, marketing, and renovation processes. Also, you must have the ability to oversee and manage repairs of houses. Flipping is the “wild side” of real estate, and that is why novice investors are usually advised to consider strategies.
House flipping is an investment in underpriced, usually abandoned properties needing renovations before they can be considered habitable. You must have seen it being done in some TV programs, but those programs do little or nothing to show you the risks and work put into flipping houses.
As often as not, house flipping involves a lot of risks. The house flipper would need to estimate the renovation cost accurately, which will probably change over time. Another chance is that you will have to be paying a mortgage while paying a mortgage without the house yielding income.
- Can yield regular returns after flipping completion.
- Unexpected hot markets cooling.
- Requires profound market knowledge.
Join online real estate investment platforms
For this strategy, you will have to find the best investment platforms. Real estate investment platforms form a virtual connection between real estate developers and investors who want to finance real estate projects. It requires substantial investment capital because you need money to make money. After investing your capital, the platform pays you a particular percentage either annually, monthly, or weekly as your ROI. Some platforms only accept capital from accredited investors, but some are open to all and sundry.
- Geographic diversification.
- The choice of investing in either single projects or a portfolio of projects.
- Management fees.
- It might be illiquid with lockup periods.
Buy Real Estate Investment Trusts (REITS)
Most people are not familiar with Real Estate Investment Trusts (REITs). If you are not aware, you can check out our guide to REITs. However, if you want to have a real estate portfolio exposure without a traditional real estate transaction, this strategy is for you.
REITs are created by companies/corporations that own, operate, manage, and derive revenues from real estate assets. REITs are like any other stocks bought and sold on stock exchanges. Hence, you can easily buy them on stock exchange platforms with substantial capital. You do not need a realtor and title transfer to help you cash out your investment because they are highly liquid and exchange-traded.
- Long-term cash-producing leases.
- Essentially dividend-paying stocks.
- There are no associated leverages with REITS like traditional rental estate.
In conclusion, whatever strategy you intend to use depends solely on you, your time, management, and capital. If you lack management and people skills, you might want to consider REITs, investment platforms, and REIGs. Just make sure you consider the pros and cons carefully to prevent any loss. For more information on investment plans, visit croft financial and take charge of your finances.