Real estate is slowly becoming one of the most popular tools of investment due to its growing demand and soaring prices. In today’s world, owning or buying real estate is an excellent investment strategy. It can be both lucrative and satisfying when done in the right way. Here are a few such ways in which you can invest in real estate:
Investing in Rental Real Estate Property
Investing in a real estate property for rental purpose is a practice which is as old as land ownership. You can buy a real estate property after the necessary market and area research with the sole purpose of renting it out to tenants. The costs relating to mortgage, maintenance and tax would be your responsibility for such a property.
Ideally, you should keep the rental charges for the tenant in such a way that this covers all these expenses and also provide you with a decent rental profit. You can also take a home loan using an instant loan app and then lease it out on rent to generate regular income.
Real Estate Investment Groups
These groups are almost like mutual funds for the rental real estate properties. If you do want to invest in a real estate rental property but do not want all the hassles which come with being the owner of that property, then real estate investment groups are the best solution for you.
In such an investment plan, a company would buy condos and apartments and then allow the prospective investors to buy them through their company. All the tasks like maintenance, interviewing the tenants, etc., would be taken care of by the company and in turn, they take a percentage of the monthly rent paid by the tenant.
Trading Real Estate or Flipping Properties
Real estate trading portrays the wild side of investing in real estate. Real estate traders work on the principle of buy, hold the property for a short duration and sell. The real estate traders do not own the property for more than three to four months before reselling it.
In such a practice, you can buy a real estate property which is greatly undervalued, or you can buy a property which is hot in the real estate market.
Real Estate Investment Trust
Real Estate Investment Trust or REIT is formed when a trust or a corporation makes use of the investor’s money in order to operate and purchase income properties. The real estate investment trusts are bought and sold just like any other stock on major exchanges.
A trust would have to pay 90% of the taxable profits as dividends if it wishes to remain as a Real Estate Investment Trust. This way, these trusts would avoid the corporate income tax payment, unlike the regular companies which are taxed on its profits.
These are some ways out of the many other ways in which you can invest in real estate. There are several other ways to invest in real estate besides the examples mentioned above. In real estate, making a careful choice and weighing out all the benefits and costs before investing is critical – just like in any other investment.
