When finding investment options, there are a lot of ways where you can invest your money. Real estate, mutual funds, exchange-traded funds, bonds, and stocks are great investments regardless of what experience you already have. The option you prefer may depend on how involved you wish to be, the amount of risk you are comfortable with, and how much cash you need to start investing.
Owning or buying real estate is a great investment strategy, which could be lucrative and satisfying. Unlike bond and stock investors, potential real estate investors may buy properties by paying a small amount of money upfront, then paying the balance with interest.
According to experts at Replace Your University, a great investment means there is a chance of success and ROI. If your real estate investment encompasses high risks, then you need to balance them with a possible reward. In order to get started with the real estate investment, consider the following ways:
1. Buy a Home
You may not consider your first residential property a great investment, but most people do. In fact, it is among the greatest ways to invest in real estate properties, providing a lot of benefits.
Your home equity line of credit consultant will tell you that buying your own home can help you build equity from monthly payments instead of paying rent, which seems to increase yearly. A portion of your monthly payment will also go into your pocket.
2. Invest in REITs
REITs (real estate investment trusts) will enable you to successfully invest in real estate without physically being involved. Compared to mutual funds, REITs are companies owning commercial real estates, like hotels, apartments, retail spaces, and office buildings.
Real estate investment trusts pay high dividends, which makes them a very common investment for retirement. Investors who want or don’t need regular income may reinvest dividends automatically so as to further grow investments.
REITs are a great investment. But they may as well be complex and varied. The kind of real estate investment trusts you buy will be a great factor in the risks you take on. New investors, though, are advised to consider publicly-traded REITs from brokerage companies.
For this, you will require a brokerage account. If you don’t have one, it will take around fifteen minutes to open one. Plus, most companies don’t need any initial investment.
3. Purchase Rental Properties
Buying rental properties is a perfect way to generate extra income every month. To achieve this, you will need to buy rental properties with a monthly mortgage payment, property tax payment, and home insurance payment. There are a few ways you may do this, from purchasing an area with high rents to investing a lot of cash so you can pay the low mortgage payment.
There are downsides to directly owning rental properties. Typically, it needs a lot of money upfront, from maintenance to the down payment. You will also have to assess whether your ROI is worth it.
Another downside of this kind of real estate investment is dealing with tenants. You have to screen renters before you let them move in. Plus, you are bound to come across sob stories. So you will need to learn to be very firm with your renters.
4. Flip Homes
Flipping homes offers a different take when it comes to real estate investment and property ownership for beginners. Rather than adding properties and managing renters, flipping homes are a temporary investment. If you research well, flipping homes might be a fun way of venturing into real estate.
Flippers who buy properties or houses that require renovations spend more time fixing them to boost their value and sell them at a high price. A flip is short-term because the intention is to sell quickly and work for another deal.
Due to volatility in the industry, it might take more time to flip properties based on whether there are potential buyers for properties.
5. Think of Crowdfunding
This is a strategy, which allows enterprises to increase capital from a group of people. It is often done through online platforms providing a marketplace/meeting ground between interested investors and real estate developers. In exchange for cash, investors receive equity or debt in the development project, quarterly/monthly distributions, and in successful cases.
Not every crowdfunding platform is available to everyone. Most are reserved for investors or highly experienced or net-worth individuals. But still, there are fewer exclusive crowdfunding platforms, such as RealtyMogul and Fundrise, which allows beginners to invest with as little as around $500.
Through these platforms, you can create an account as well as choose a portfolio strategy depending on your goal, with real estate brokers diversifying your investment across a series of funds or choosing an investment yourself. This enables you to keep up with your progress through an online dashboard.
6. Invest in a Farmland
When considering real estate investments, farmland might be the last thing to come to your mind. Farmland remains a great investment with a very impressive track record.
Farmlands will always be important, and their supply may continue to decrease. Because of that, farmlands are likely to appreciate, making a suitable investment to generate cash flow.
7. Consider Commercial Properties
This is where you can invest in storage/warehouse, retail, and office. It basically follows the same pattern that residential rental properties do. You buy commercial properties and rent them out to people who will help to pay your mortgage and make a profit.
Investing in these properties is a little expensive and complicated compared to residential rental properties. Commercial real estate property is the best investing method for people with more experience, thanks to their remarkable gains, which you can make if things are done right.
The Bottom Line!
Investing in real estate is among the greatest ways to earn cash. It is also one of the long-term investments, and you may use them as collateral when taking loans, like HELOC. It can also help you build wealth by reducing debt obligations and increasing your assets.