If you’re looking for ways to diversify your portfolio or have any interest in getting started with real estate, there are several options for you to consider.
Investing in real estate can sound intimidating, but if you do your homework you’ll be more prepared and can have confidence in your investment.
First up, if you’re just beginning in real estate and not quite ready to purchase a property directly, you can start by investing in a real estate investment trust (REIT).
A REIT is a real estate investment company that owns or finances income-producing real estate. A lot of REITs own commercial real estate like hotels, apartments, hospitals, etc.
When you invest in REITs you earn a share of the income produced.
With rental properties, you can collect rent from your tenants and profit from this cash flow once the mortgage is paid off.
Another way to profit off rental properties is through appreciation. If your property appreciates over time, you can sell or borrow against your equity for other investments.
One thing to consider with rental properties is that you will be the landlord if there are any issues or repairs needed.
Larger property investment companies will purchase up rental properties and hire landlords and property management companies to take care of this for them should a problem arise.
One of the more popular and well-known real estate investments shown on popular tv shows and in-home improvement magazines is fix-and-flipping.
This can be done in a couple of different ways. The first is through renovations. You can buy an older or more run-down property and make repairs and improvements to increase the value of the house.
You can then turn around and sell for a higher profit than you initially bought the property for.
A second way to flip a house is by buying and holding. When the market is hot and demand is rapidly rising, by simply buying a home and holding on to it for a few months you can turn around and sell at a profit.
Real Estate Investment Groups
Real estate investing doesn’t have to be complicated or time-consuming.
A real estate investment group (REIG) is a group of investors that pool their money to purchase income-producing properties they otherwise could not have bought on their own.
This is a great option if you want to invest in real estate without the hassle or demands of other investments.
Another option similar to rental properties in nature is a vacation rental property. If you live in a popular area with a lot of tourism, you might want to consider this option.
You should only buy a vacation rental if you know the market well. Vacation rentals come with seasonal demands that can leave you fully booked some months and vacant others months. You should know the market so you can anticipate these seasons and plan accordingly.
Also, take into consideration that you will be in charge of maintenance and cleaning after guests or will otherwise have to pay a company to do this for you.
While you may have to advertise your rental, and put some work into property management, a vacation rental in the right location can easily multiply your income exponentially.
Invest in Real Estate Online
There are so many different ways to invest online. You can find companies that connect borrowers to investors, so you can finance a real estate project.
There are also crowdfunding companies that look for investors to pool their money to invest in larger projects like commercial property or multifamily properties. Do some research and find reputable companies to invest with!
Invest in Your Own Home
If you’re looking to ease into real estate investing, one way to start is with your own home. Right now there’s a high demand for housing.
Many people take this opportunity to sell their homes at a profit. Start improving, renovating, and finding other ways to increase the value of your home. With appreciation, you could profit off of your own home.
Not only that but owning your own home outright can protect you against the volatility of the housing market.
Many people will argue about what they think is the best real estate investment. There is no right or wrong answer.
Do your research and find out which option is best for you and your circumstances! There are several different opportunities to consider, ranging from highly involved investments to more hands-off, passive investments. Find what works best for you!