If done right, investing in real estate can prove extremely lucrative. What’s more, unlike stocks and bonds, you don’t necessarily have to have cash on hand to start investing. Whether you’re looking to start investing in real estate, or have been investing in it for a while, these 3 options can be advantageous to you.
Purchase a Rental Property
When you own and rent out a property to tenants, what do you think can happen? In a perfect world, the rent you collect will become a source of passive income for you. If the mortgage payment for the property is $1200 and you secure $1800 from your tenants, then you could be netting a cool $600 every month.
Of course, being a landlord comes with its own set of responsibilities. Generally, you are responsible for the maintenance and upkeep of the property. For example, If the refrigerator or washer breaks, you may be required to fix it. If you’re not very handy yourself, then you can always outsource such tasks to contractors and/or a property management company.
In general though, the pros often outweigh the cons. Not all investments net immediate profit, and rental properties are no exception. Every time you have to dip into your own resources to fix something in the house, think of it as a good thing: the more you fix, the more attractive the property will be to potential tenants or buyers.
Fix & Flip Houses
What does it mean to “flip a house?” More of a short-term, one-and-done transaction, flipping houses is the practice of buying a property with the intention of selling it for profit. Generally people who flip houses look for properties that are in need of renovation. This is because the cost to buy the property is lower. In return, house flippers invest money and resources into fixing it up and getting it ready for the market.
Unlike a used car, houses can appreciate in value if their interior or exterior is improved; therefore, while house flippers may spend capital on renovations, they do so knowing that they will profit when they sell. If you’re interested in this option, consider getting fast funding from a hard money lender like Sachem Lending.
Buy Real Estate Stocks (REITS)
Real Estate Investment Trusts, or REITS for short, are great for both beginners and seasoned investors. REITS are bought and sold on the major exchanges, like any other stock. Since you can buy in at the price of a single share, REITS make it easy to get real estate exposure without having to purchase, maintain, fix, or sell properties yourself. In addition, when you invest in REITS, you are not limited to residential homes. Real estate comes in the form of a variety of different properties, including malls, office buildings, and shopping plazas. While purchasing, owning or flipping such properties requires a considerable amount of capital, such concerns are largely absent from REITS. If you want to invest in commercial properties, then all you need is the capital to buy at least one share of a stock. In this way, REITS can offer a lot of diversity to your portfolio.
Another great advantage of investing in REITS is that they always come with dividends. Essentially, when a REIT company profits, you get a share of that action; therefore, when the rental properties make money, you do too. What’s better than that?