Looking for new opportunities to invest your money? Or simply curious to learn how real estate investing works? Keep reading the post to find out 3 simple ways you can invest in real estate too.
Real estate investing is the “art” of buying a property and making it profitable over time. The good thing, compared to other forms of investments like stocks, is that you can buy a property by paying only a portion of the total cost upfront and paying off the remaining balance, plus interest, over time.
So, how do you make money investing in real estate? Well, according to David Ebrahimzadeh, President of Corniche Capital, when an investment increases in value, that’s where you male the money. It can be risky, depending on the type of investment, but the balance between risky and solid investments can pay off over time.
Let’s have a look at 3 ways you can invest in real estate:
1. Rental Properties
This is the “oldest” and most known one. It’s a great opportunity, especially if you have time to invest to renovate a property and increase its value. It can provide you with a regular income, the rent paid by your tenants, but you have to consider maintenance costs and the time where your property hasn’t got tenants in.
2. Flipping Houses
Flipping a house can be seen very similar to the upcycling technique. You buy at a cheap price, renovate it and increase the value and then re-sell it. The downside can be that the repairs and updates might end up costing more than what you expected, leaving you losing money.
3. Real Estate Investment Groups
Real Estate Investment Groups are a great way if you want to own a rental property but without the hassle of being a landlord. REIGs are a sort of small funds where a company buy or build a set of building and you can buy one or multiple units by joining the group. Then the group takes care of maintenance, advertising, and finding tenants rather than do it yourself as you would with a normal rental property.
An investment of its own
As mentioned above, real estate investing gives you the possibility that other forms of investments don’t have. The ability to buy upfront only a portion of the house and still have control of the whole property. Usually the deposit for a house is around 20-25% of the property value but, depending where you are located, you might find a mortgage with a down payment of as little as 5%. Awesome, isn’t it? In this way you can even open a second mortgage, also known as equity loan, and put down a payment for further properties. A fast way to increase your property portfolio.
Real estate investing can still be a great way to invest your money as it offers a lot of options, even for those who don’t want to invest in a physical property. If you’re interested this subject, here‘s an article from Forbes about way you can invest in real estate without buying a property.
The most important thing is doing your research before you invest your money like you would do when investing in stocks, shares and funds. It’s not gold everything that shines, but done it wisely can bring you some good profit.