Whether you are saving for a business opportunity or planning for retirement, you think of investing your money to gain better returns. A common place to invest our money is in stocks. Most people are not aware of others options that are more effective. Another such alternative is Real Estate.
Real estate investments yield better returns, offer diversification, and are lower in risk under the right circumstances. Investors in real estate gain more leverage on their capital and also have tax benefits. There are also risks involved in real estate but proper knowledge of the market can help mitigate risks.
Investing in real estate is as easy as buying a mutual fund. There are many ways to invest in real estate. We are here to provide you with some options through which you can invest in real estate.
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REITs, or real estate investment trusts, allow investors to invest in real estate without being involved with the physical real estate. They pay high dividends, making them a good investment. You can further invest your dividends to grow your investment if you do not want the regular income.
REITs are complex and varied. Some are publicly traded on an exchange like a stock. Non-traded REITs are hard to sell and hard to value. If you are a new investor, you should stick to publicly traded REITs. You can choose from any of these based on various risk factors.
For investing in publicly traded REITs you need a brokerage account. Opening a new account is easy and does not require an initial investment.
Online real estate platform
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There are online platforms that connect investors to real estate developers, who need money to finance projects, through debt or equity. Investors receive monthly or quarterly distributions in exchange for their investments and risks are taken. These platforms are speculative and you cannot easily sell them like stock.
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You can buy a property and rent it out to a tenant. You, being the owner, will be responsible for paying mortgage, taxes and costs for maintaining the property. You can charge enough rent to cover all of these costs and to generate a monthly profit. With the passage of time the value of property under mortgage will appreciate which in turn will prove to be a valuable asset. It also involves risks like bad tenants who damage the property or end up with no tenants, creating a monthly expense for you. You may struggle to find the right property. This type of investment involves time and work on your part. You can also hire a professional property manager to manage these responsibilities for you.
Buy, Repair and Resell
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You can purchase an underpriced property, renovate it, trying to incur the least expenses possible and then resell it at a higher price for a profit. This is known as house flipping and is quite a hard job.
The problem with this form of investment is that you have to pay the mortgage for the time that you hold the property and that too without any income.
There are many types of real estate investments. We have listed just a few of those. A real estate is a potential form of investment but it does not offer assured gains. You can invest in real estate depending upon your capabilities and deciding on the amount of risk you wish to intake. Invest carefully after weighing out the costs and benefits of your investment.