Simple Ways To Invest in Real Estate
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When it comes to investing in real estate one could look at it as the gift that keeps on giving. Not only is real estate a very viable market, but it’s one where the value of the property can continue to increase over time. Many people invest in real estate knowing they will sell it down the road and some are in the business of flipping houses they buy for cheap and fixing them up to sell at a higher price. But how does one get started? There are so many options out there when it comes to investing in the real estate market so we have devised some simply ways for you to dip your toes in the water.
A Basic Rental Property: This is one of the oldest and most popular ways to invest in real estate. Basically, you purchase a property and cover the taxes and mortgage along with other related expenses and then charge rent to the tenant to cover them. Of course, you want to charge enough to make a monthly profit but for the most part you’ll just want to try and break even until the mortgage is paid. From then on, most of the rent will be strictly profit. This is an easy door into real estate investment for someone who hasn’t had the experience.
Real Estate Investment Group: This can best be explained as mutual funds for rental properties. If you have the desire to own a rental property, but don’t want to deal with being a landlord, a real estate investment group could be a better choice for you. These groups purchase apartment buildings and allow investors to buy them through the company. You will own the units you invest in but the property will be handled by the group. It’s less stress and hassle for as a new investor, so we highly suggest you consider this route if you are new to the business.
Real Estate Trading: If you are looking to be more of a risk taker, real estate trading also known as “flipping” allows you to purchase a house and hold onto it for a certain period of time before selling it for a profit. While sometimes it doesn’t always work out that you make a profit, this type of real estate investment can bring greater rewards due to the greater risk.
Real Estate Investment Trust: Also known as an REIT, this is created when a corporation uses investors’ money to purchase and operate properties. These REITs are bought and sold on the stock exchange just like normal stock. So if you are savvy in the stock market this could be an option without actually having a physical property to manage.
Leverage: When it comes to investing in real estate you have one tool not available to stock market investors and that’s leverage. You don’t have to purchase an investment property for the whole value with most mortgages requiring only 25% down. This means you can control the property and the value of the equity by only paying a fraction of the full value.
By Daily Insight.