Lots of people don’t like the idea of being a landlord: fielding calls about flooding toilets and gigantic bugs doesn’t seem like one of the best jobs in the world. However, if done correctly, real estate investing can be extremely lucrative and satisfying. It can help broaden your current investment portfolio and be an additional income stream. And the good news is that many real estate investments do not require being at a tenant’s beck and call.
The problem is that most investors do not know where to begin when it comes to investing in real estate. However, getting into the real estate market can be easier than you would think. Here are some of the simple ways you can invest in real estate:
1. REITs (Real Estate Investment Trusts)
This is a great option for anyone who likes the idea of investing in real estate but does not want physical real estate. REITs are often compared to mutual funds; they are businesses that own commercial real estate such as retail spaces, office buildings, hotels, and apartments.
REITs tend to pay huge dividends, which makes them a popular investment for retirement. Investors who do not want or need regular income can keep reinvesting their dividends to increase their investment further.
REITs can be a brilliant investment, but they can also be hard to manage and complex. Some are not publicly traded while others are traded on an exchange like a stock. The type of REIT you choose can have an impact on the amount of risk you are taking. Non-traded REITs can be hard to sell and are often hard to value. If you are a new investor, then you should consider choosing a publicly traded REIT.
2. Online Real Estate Investing Platforms
Online real estate investing platforms connect investors with real estate developers who are wanting to finance their projects either through equity or debt. Investors usually receive quarterly or monthly payments in exchange for paying a fee for the platform and taking on a certain amount of risk.
While this may sound like an amazing opportunity, it is important to remember that most trading platforms are only open to accredited investors who have an individual net worth of $1 million or more or an income of $200,000 per annum. In other words, you need money to make money.
It is also important to do some research into the different real estate investing platforms before you invest any of your hard-earned cash. There are lots of real estate investing platform reviews online, so check out your options.
3. Rental Property
Although lots of people are put off owning a rental property, they can be a brilliant opportunity for people with renovation and DIY skills who have the patience to look after tenants. However, this option does require money to finance up-front renovations or upkeep costs and to cover any unoccupied months.
Investing in real estate can be both rewarding and lucrative. Prospective investors can use leverage to purchase a property by paying a small percentage of the total price in advance, then paying the rest of the money off, including any interest, over time.
The advantages of investing in real estate are various. Investors can enjoy excellent returns, predictable cash flow, tax advantages, and diversification, and it is possible to leverage real estate to build wealth. If you like the idea of investing in real estate, then why not try out one of the options listed above?
