Investing in real estate is one of the most profitable investment decisions you can ever make; no matter your experience level, you can always make a profit and improve on your expertise.
However, since you are a beginner in the real estate market, giving adequate time to learning before you start investing is advisable because the real estate market is vast. Moreover, small mistakes can lead to major losses.
So if you’re interested in investing in real estate but don’t know how to start, this guide will be of great use to you. We will discuss five tested and proven ways to invest in real estate.
House Flipping
House flipping is a type of real estate investment that requires some experience, but the concept is pretty simple. It involves buying an undervalued property that needs some renovation and repair, then you make the house as good as new, and sell it at your own price.
You will need some real estate experience to succeed here because the process involves a lot of math, and it is more risky than some other types of real estate investment. In addition, things are now more expensive than they used to be, and hence many things can happen in renovating and reselling. So you need to know how much the entire process will cost and what the property will be worth after the renovation.
Real Estate Investment Trust
If you are looking to expand your real estate portfolio without some actual real estate transactions, this type of investment will be an excellent choice for you. A real estate investment trust (REIT) is done by a corporation that uses funds from different investors to purchase properties. They sell the properties at higher prices and make a lot of profits, after paying taxes, the profits are shared between the corporation and the investors.
REITs are often traded on exchange platforms like stocks, while some are not traded publicly, but the type of REIT you purchase will determine the risk involved in your investment. Those not publicly traded are hard to value and are not easily sold. So it is better to buy publicly traded REITs.
Rental Properties
If you have the patience to work with tenants and are willing to invest in renovations and repairs occasionally, rental property investments can be a great way to start investing in real estate. However, this strategy involves huge start-up capital because you will need to build or buy the property you intend to rent.
The greatest advantage of this real estate investment is that you will get to earn regular income and profits for as long as you want; all you need to do is manage your tenants properly and do your best to prevent property damage from the tenants.
Real Estate Investment Groups
It will also interest you to know you can own real estate without the hassle of managing it yourself. With real estate investment groups, a company builds a set of apartments and sells them to various investors, thereby creating a group of investors.
However, everything that has to do with the management of the building, from renting, maintenance, advertising, and so on, will be handled by the company and in return, the company will take part of the rent.
As a single investor, you can purchase multiple units from the property and join multiple investment groups if you understand and agree with the terms of operation. Also, the lease will be in your name as the owner of the properties.
Real Estate Crowdfunding
Real estate crowdfunding is mainly for people wanting to join others to invest in big commercial or residential deals. The joint investment is organised online through real estate investment platforms, also known as crowdfunding.
You will still need capital to invest in this type of real estate, but it will not be as much as doing it alone. The platform helps to connect you with other investors online who are also looking to finance projects, and you will all work with an agreed plan for the investment and profits.
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Like all investment decisions, the best real estate investments are the ones that best serve you, the investor. Think about how much time you have, how much capital you’re willing to invest and whether you want to be the one who deals with household issues when they inevitably come up. If you don’t have the necessary DIY skills, consider investing in real estate through a REIT or a crowdfunding platform rather than directly in a property.
