Tuesday, 21 November 2017

Simple Ways You Can Invest In Real Estate

Written by Posted On Monday, 13 November 2017 23:38

Real estate has become one of the most popular investment instruments in the past few decades. Individuals looking to park their wealth have several choices to look at, but the property market offers certain advantages that make it a favorite for many. For one, real estate investments are available in all shapes and sizes, which provide alternatives for people with varying needs. Whether you are looking to own shares in a cooperative, buy an entire building, or build one from the ground, the opportunities are endless. When looking to beef up your portfolio, real estate is one way to make your money work for you but where should you invest?

Residential Real Estate

One type of property ownership that you can put money in is residential. You become a landlord to people who want a place to live. As the homeowner, you will cover some basic costs including taxes, mortgage, home insurance, and property maintenance. Residential real estate comes in various forms like condominiums, family homes, and apartment buildings. Some properties also have a service aspect to them such as concierge and assisted living facilities for seniors. Leases for residential real estate can run for six months to one year. One thing about rental properties is that they take a while before making profits. The first earnings may only be sufficient to pay the mortgage and other charges.

Commercial Real Estate

Alternatively, you can opt to invest in commercial properties and rent to business owners. These kinds of property investments can be anything from office building to shopping centers. Commercial real estate investing carries more obligations than residential property ownership. For one, the leases are longer – a company can hold a 5-year contract for your building. One upside to this is that even when comparative property values drop, yours will still be earning the same profits in that period. Conversely, when rental prices go up, you will have lower profits compared to similar properties. As with residential properties, commercial real estate has to be suitably located to attract the right kind of tenants.

Real Estate Investment Trusts

REITs are designed to trade like regular stocks on the exchange market meaning that an investor can buy them in any amount. Real estate investment trusts are suitable options for someone who doesn’t have means to buy their own properties. REITs are made up of different real estate products. For example, one trust may have over 5,000 commercial properties across various states. It means that when you own shares in such a trust, your profits come from multiple real estate pieces. Additionally, there is no federal income tax on REIT corporate earnings as long as they distribute 90% of the profits to the shareholders. Another reason these investment trusts are uncomplicated is that you don’t have to do anything except pick the right investment instrument. You won’t have to fret about paying tax on property or hiring a firm to manage your tenants which saves you a lot of frustration.

Crowdfunded Real Estate

A relatively new method of owning property is through crowdfunding. Crowdsourcing has become a viable solution to get funds for various business ventures. Now investors can come together and pool money to invest in real estate deals. One concern that potential investors have is the legitimacy of the people they may be partnering with. Top crowdfunding platforms have found ways to deal with that by making sure that only accredited investors can join in on a project. The minimum amount you can contribute varies from one site to the next, so you have to choose the most appropriate one. You get to pick the deals meaning your opportunities increase exponentially. If third world real estate is your ideal venture, you can find investors with similar interests.

Real estate investing has its share of complexities, but the returns are worth it once you figure out what works. The different assets available give you a chance to diversify your money-making avenues. Take the time to learn what each type of real estate investment offers and see if it matches your financial goals.

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