Investment can never be an easy decision, especially when you are planning to invest in real estate. It is both satisfying and money- making. Unlike other investments, real estate prospects can use borrowed money to buy a property, and pay rest in installments over time.
Where in other investments generally requires 20%-25% of the total amount as down payment, but in real estate to purchase a property it usually asks for 5%-10% of down payment.
Here we are stating five key ways for investors so they can make money on real estate.
5 Simple Ways To Invest In Real Estate
1. Rental Properties
Rentals for your owned property are one of the most important ways to earn extra income on regular basis. And overtime, the property appreciation is an add on for the owner. Also, with rents some of the associated taxes are deductible and benefits can be gained. On the other hand, advantages come with associated disadvantages as well. Putting up property on rent can be tough to manage, tenants can even cause damage and vacant homes can reduce income.
2. Real Estate Investment Groups (REIGs)
Real Estate Investment Groups (REIGs) are meant for the people who want have rental real estate to avoid the hassles involved in running it. But, investing REIGs calls for capital cushion and access to financing.
REIGs are usually like small mutual funds that make their investment in rental properties. They buy or build a property, which further allows investors to purchase them through the company via joining the group.
Benefits included under REIGs are more hands off than giving rentals, gives more income and property appreciation. Some of the risks involved are vacancy, cost similar as mutual funds.
2. House Flipping
House flipping needs people who own significant experience in real estate marketing, valuation and more. It calls for the need of capital, ability to oversee and maintain property. They buy a property, renovate it and sell it to gain profits.
The flippers buy a property at reasonable pricing, add value to it. It is a long term investment and only 1-2 properties are done at a time. It holds up capital for short span and offers quick returns. But to be in profits, you have to possess in depth market knowledge.
4. Real Estate Investment Trusts (REITs)
A Real Estate Investment Trust (REIT) is a company that has the ownership, and mostly operates income-producing real estate. They use investor’s money to buy income generating properties.
REITs essentially pay out profits and the core holdings tend to be for longer period of time and cash inducing leases. Associated leverage with REITs on traditional rental real estate is not applicable here.
5. Online Real Estate Platforms
The investments done in real estate via online platform are called online real estate platforms and real estate crowd funding. These platforms are for the people who want to join others in investing for bigger commercial or residential properties.
It requires less capital than that is used for buying property outright, and also you can diversify investments with less money in hand. But with this, there tends to hold illiquidity with lockup periods and involves management fees.
Conclusion
When a real estate investor uses property to generate rents or look out for the perfect opportunity to sell it, these above discussed points can help you out in making some money. In real estate, there is profit and potential, whether the overall market is up or down.
Read Also: Top 10 Best Residential Projects in Hyderabad
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