If done right, real estate investing can be one of the best ways to diversify your investment portfolio. Plus this type of investing can add another stream to your income. Contrary to stock and bond investors, potential real estate investors may use leverage to acquire a property.
Another way to make money in real estate is to become landlords of rental properties. Although this option is not for you if you’re someone who’s not up for answering calls about overflowing toilets. But hey, a lot of people are doing this and so far the return of investment is quite hefty.
With all these available real estate schemes, it’s no wonder a lot of people are delving into this industry. However, the trouble that new real estate investors often experience is that they don’t know how or where to invest. So, here are some of the best ways that you can make money with your real estate investments.
Finding the Best Way for You to Invest in Real Estate
Buying REITS (Real Estate Investment Trusts)
What REITs does is that it allows you to invest in real estate without really having a physical property. They’re similar to mutual funds. These are companies that own a range of real estate—from commercial buildings to apartments.
REITs can offer high dividends, as such, it’s one of the common investments in retirement. More importantly, REITs are exchange-traded thus, it’s highly liquid. This means that you won’t need a realtor or a title transfer to cash out your investment.
Using Online Real Estate Platforms
Real Estate investing platforms are good for anyone who would want to join other investors in investing in large commercial or residential deals.
The process is fairly easy. Like what the name suggests you can do your investment via online real estate websites. While it still requires an investment capital, the amount is comparatively lower than purchasing a property outright.
The key takeaway for this way of investing is that it offers diversification in terms of the location of your properties plus you can invest in either a single or multiple projects. However, this tends to be illiquid, considering the lockup periods and the management fees.
Investing Real Estate Properties
Having your own rental property is a great opportunity for people who have the do-it-yourself (DIY) skills, and of course the patience to manage tenants. This type of investment would require a substantial capital amount to cover any maintenance cost and repairs.
On the plus side, rental properties can provide regular income and you can utilize the capital through leverage.
The bad side? Well, managing tenants, as well as the possibility of property damage, is something that landlords would have to deal with occasionally.
Flipping a House
Real estate investors would buy an underpriced property that requires a little bit of makeover. They would renovate the place in the most inexpensive way possible before putting it back on the market.
This type of investment is usually done by people with much experience in the real estate industry. Flipping requires capital. Having project management skills on the side would also come in handy. Full-time property flippers usually don’t buy estate that still needs many renovations. Thus, the investment should already have the intrinsic value to turn it into a profit without going through many alterations.
The risky side of this–is the possibility of not unloading the property sooner. Some flippers might not have a large amount of cash on hand to pay the mortgage for the long-term.
Real Estate Investment Groups (REIGs)
This way of investment is ideal for individuals who would want to acquire a rental real estate but do not want the hassle of running it. For potential real estate investors in REIGs, you would have to prepare a capital cushion and access to some kind of financing.
One of the pros of this kind of investment is that it’s more laid back compared to owning rentals. It also provides stable income and appreciation. Its cons, however, are the vacancy risks and the chance of encountering shady managers.
Whether or not would-be real estate investors use their properties to gain more income through rentals or to bid time until it’s conducive to sell in the market, it’s important to create a robust investment plan.
The risks are inevitable but when you’re prepared then really, there’s nothing to fear. That’s why here at MTLOA we strive to make our investors understand the process and ensure that they’re making the right decision.
If you’re interested in being part of our investors’ club then visit mtloa.com to know more.