People buy homes to raise families, but while owning a home is a good investment, it’s not the same as income properties, which can provide you with a passive income. When done right, real estate can be an additional income stream. Investing in real estate property doesn’t necessarily mean that you will be required to show up when your tenants call. Nevertheless, you do need investment capital to fund your property. Luckily, there are a few effective real estate investment tips that you can try. Here are six clever ways that you can invest in real estate and create wealth.
Buy Real Estate Investment Trusts (REITs)
REITs give you the flexibility of investing in real estate without necessarily purchasing a physical property. They’re similar to mutual funds, whereby companies own commercial real estates such as retail spaces, office buildings, hotels, and apartments. REITs pay handsome dividends, and this makes it one of the most common retirement investments. What’s more, you can reinvest your dividends to grow your investment.
Owning rental properties is an excellent way for you to make money. You can start by purchasing property in a desirable location to secure tenants quickly. Apart from providing you with a stream of cash from the monthly rent, a rental property can quickly appreciate, especially if you make significant improvements.
Buy and Hold
This is a more traditional strategy of earning income in real estate. It is an ideal option because of the long-term gains and short-term cash flow. There are a few ways you can accomplish this: You can buy luxurious waterfront houses and rent them out or purchase a multi-family property and rent out the units. Whichever strategy you choose, ensure that the monthly revenue exceeds your monthly expenses, including mortgage payments, taxes, interest, and maintenance costs.
If you have experience in property renovation, valuation, and marketing, house flipping can be an excellent way to build wealth. House flipping involves buying property and adding high-return improvements, and then sell the property for a profit. To succeed in house flipping, you should have a team of experts – accountants, attorneys, interior designers, and contractors you can trust.
Online Real Estate Investing Platforms
Several online platforms connect investors with real estate developers. You will meet investors who can finance your real estate project for equity or debt. Most of these investors will want to receive monthly or quarterly reimbursements for the risk they take on.
REIGs (real estate investment groups)
REIGs are ideal for investors who want to invest in rental real estate but without the hassle of running it. This type of investment will require a significant amount of capital and access to financing.
Through REIGs, a company may build or buy apartment blocks or condos and allow investors to purchase individual units, hence joining the company. You can choose to own one or multiple units, but the company will be managing all units, advertising vacancies, handling maintenance, and screening tenants. The company will then take a small percentage from the monthly rent for their management services.
Investing in real estate is easier than you think, and there are several ways to start your real estate investment journey. However, because real estate projects can take years before they pay off, you should consider them a long-term investment. Additionally, it’s always a good idea to sign a written agreement when partnering with other investors.