Real Estate Investment
Investments are essentially high-risk and perilous, particularly real estate investment. In fact, just a decade ago, the subprime mortgage crisis happened which, for the most part, collapsed the real estate market. This crisis played a huge role in a catastrophic market slump.
So, is investing in real estate still a great investment scheme today? Just like any other kind of investment schemes, doing extensive research and evaluating all your options is quintessential. Take note that one of the main reasons for the subprime mortgage crisis was exploitative loan agencies seeking to oppress vulnerable home buyers.
Keep in mind that real estate investment is not for everyone. Therefore, it is of the utmost importance to fully understand the potential risks and avoid working with loan companies and lenders that use suspicious practices. If you are ready to dive into the real estate world, you must first determine if you want to invest without buying property or by purchasing a property.
Buying Property: Real Estate Investment
For most of the ways for which you can invest in real estate, you will undoubtedly need to have enough money saved. This statement is inherently true if you’re going to purchase a property. If you have money saved, purchasing property is, more often than not, the most straightforward way to invest in real estate.
However, buying a property requires more than merely acquiring it. Here are a few ways on how you can invest in real estate that need you to buy a property.
Buy a House
Investing in real estate is as simple as buying your house and reside in it. Instead of purchasing a property to flip it, buying and living in it can often be subsidiary to why you purchased the property, to reside there. However, by continually doing a few renovations and paying your home mortgage such as Reverse Mortgage Rating, you can boost and improve the value of your house.
This is especially helpful if you want to, in the near future, sell it and find a new house to live. So, consider your property as a long-term investment that could potentially pay off in the long run.
Buy Non-residential, Commercial Property
The commercial or non-residential property, such as office buildings and retail buildings, is a fascinating option for those people who’d like to invest in real estate other than residential property. However, keep in mind that it may be costlier and more expensive. So, it’d be best if you could look for a partner to work with this investment.
As a part-owner or owner of the property, it’s ideal to rent out the property to those who are in need of space. Although it is risky, it’s undoubtedly a worthwhile real estate investment. The profit you can gain from renting space is, believe it or not, higher compared to the residential properties. Plus, the leases of non-residential property are much longer.
Leverage Listing Apps Such As Airbnb
Lodging application such as Airbnb has become a prominent option for some people to increase and amplify their income. So, why not include or combine it into your real estate investment?
How does Airbnb operate? First, you need to register your property on the application, define the kind of accommodation you are offering, how many people you can accommodate, and it’s availability. Also, you get to accept the guests who will be staying at your place.
This lodging app is an excellent option in some areas — for example, a comfortable apartment in a well-known city or a sought-after vacation destination. With Airbnb, you could make a decent income.
You May Read: Trump’s Real Estate Investments in India
Buy a Vacation Property
Purchasing a vacation property denotes or entails renting out to occupants for a short period of time. If you could keep up a decent house in the right location, then you can make a decent profit from vacation tenants.
Such real estate investment is, for the most part, located in a desirable area, which can be costly to purchase and maintain. If you have excellent vacation rentals, it could become a profitable investment, especially during summer.
Purchase Rental Property
Well, buying rental property can signify different things. For instance, if you have enough money, you can choose to buy a whole rental property and make it as an apartment or rent out the rooms to tenants. To gain more profit, you should keep your overhead low and keep the rent reasonably priced to attract potential tenants.
On the other hand, if there are available rooms within your house, then you can rent out these rooms as well. Whatever it may be, you will always be the landlord or the host. If you can be a good landlord, then you’ll likely to succeed in this scheme. Don’t forget always to keep the house in excellent condition and make it readily accessible to your potential tenants.
This real estate investment tactic is where you make a contract to your tenant. In the agreement, it states that you rent out a property for a definite period of time. And once the contract expires, the tenant has the option to buy the property. More often than not, the opportunity to buy is a requirement. In essence, it’s like a tenant’s promise to buy the home.
A certain amount of the rent payments usually go toward the mortgage’s down payment once the purchase is official. This tactic comes with risks. However, rent-to-own agreements are excellent for people who can’t commit to purchasing a home, giving them more time to work out their loans. As the owner, be sure to study the contract to ensure that the points are in your odds and aid you in making the process much more manageable.
Purchase and Revamp a Property
Real estate flipping allows you to get more involved in the investment. Why? It is because you purchase the house, you fix it up, and market it for a decent profit. With that said, it may require you to invest more of your time. It is not a one-time process as it needs you to have in-depth knowledge about home improvement and real estate. Most importantly, patience is essential if you are going to be a fixer-upper.
Not Buying Property: Real Estate Investment
If purchasing an actual property is too much for you, worry not. There are other ways for you to invest in real estate without buying a property. Here are a few of them.
A real estate investment trust or REIT is an agency that either finances or owns real estate that generates income. Majority of their money gets invested in real estate, which is how they produce their income. As an investor, do your research on the flourishing REITs and buy shares in them because it has more potential to become a lucrative investment.
Real Estate Mutual Funds
This real estate scheme is different from REITs. In comparison, REIT is a company, while real estate mutual funds are investments that get pooled all together and managed by an investment manager.
This investment enables investors to diversify their portfolio. Just like other kinds of mutual funds, you have the power to choose which investments are, for the most part, income-oriented or growth-oriented. As a diversified investment, they help mitigate the risks. However, they’re still susceptible to a few real estate-related risks. And if an investment gets affected, the other investments will get adversely affected as well.
Become a Real Estate Agent
Aside from REITs and real estate mutual funds, you can also become a real estate agent or start a brokerage yourself. However, opening a brokerage is not simple, and it might be expensive. Also, either way, you need to have extensive knowledge and training. Nevertheless, becoming a real estate agent can help you make lots of money that you’d ever imagined.
No matter what you want to invest into, investments always come in with risks. They’re somehow inevitable. However, you can combat these potential risks through research and knowing all of your options. If you want to invest in real estate now, you should better understand if you wish to buy a property or not.