Nowadays, investing in real estate might be challenging for many people. However, it doesn’t have to be complicated to begin investing in real estate. In fact, there are simple ways to start investing in real estate.
Therefore, in this article, we decided to focus on the three best ways to invest in real estate. And even if you are a beginning investor, you might find the following three suggestions attractive. So, if you want to achieve your financial goal without getting grey hair from the complexity of taxes, rent, or even property maintenance, then keep on reading.
Real Estate Investment Trusts
REITs function like a public sector market. Typically, REIT works as an investment company. And usually, the company controls the possession and management of revenue generation of real estate properties. Typically, there are different types of REITs. Of course, the categorization is due to the difference of each real estate. Currently, there are:
- Equity REITs, which generate income from renting out of a property
- Mortgage REITs, which provide loans to property owners. In return, they get a mortgage on the property. Moreover, mortgage REITs generate money from the interest collected on mortgage loans
- Hybrid REITs, which generate income both from rent as well as the interest on mortgages
- Retail REITs, which generate revenue by leasing out commercial properties to retail tenants
- Health Care REITs
- Office REITs
Are you wondering how you can invest in REIT? In general, anyone can take advantage of this opportunity. Moreover, you can invest in property through REITs without actually being a property owner. Further, all you have to do is buy stocks or shares of the company you have chosen.
- Tax benefits
- Higher-income from real estate investments
- Liquidity – quickly sold or purchased
Real Estate Trading
Real estate trading is when investors don’t hold the properties for longer than five months. Moreover, investors prefer this investment strategy. Further, some real estate traders buy a new property the same day they sold their property.
Typically, buy buying and selling properties in such a short time, real estate trading investors can generate significant profit. However, there are also risks involved in this investing. For example, you might end up being unable to cover the expense of the new property you want to purchase.
Therefore, real estate investors should always keep an eye on their finances. By doing so, they will minimize the risk. Regardless, time shows that since 2006 real estate trading is becoming more and more popular. And if you are an investor with significant experience in real estate marketing, then real estate trading might be the right thing for you.
- Tax benefits
- Shorter time frame
- Potential significant return
Real Estate Investment Groups
Do you know what investment groups are? Well, these groups invest in rental properties. Typically, real estate investment groups buy or build apartment blocks or condos. Later, they put them for sale. Thus, the investment group allows investors to purchase them and become a part of the group.
Moreover, if you join a real estate investment group, you won’t have to worry about running the property. Generally, the investment group takes care of everything. They mane all of the units, handle the maintenance, interview tenants, etc. However, nothing comes for free. Therefore, the real estate investment group collects a percentage of the monthly rent.
Furthermore, members of the real estate investment groups pool their money. After that, they can easily purchase real estate, which otherwise they would not be able to afford. Also, when members pool their resources, outsourcing the maintenance of the property is much more comfortable.
- Learning opportunities
- Pooling sources with others
- Regular member meetings
The truth is that more and more people invest in property today, More than ever, people strive to build a long-term source of income. However, to succeed in the real estate property business, you need a few things:
So, if you are a beginning investor, make sure you are competitive in each of the fields mentioned above. And if you want to ease some of the pressure related to real estate investing, then you should consider broadening your knowledge about Real Estate Investment Groups, REITs, and Real Estate Trading. Only by understanding the advantages as well as the disadvantages of each investment type can you make the right decision.