Everyone wants to have a secured future, and hence, they adopt investment mode. Now this investment can be in mutual funds, FDs, share market, or real estate. Well, property investment is considered to be one of the most sought after and trusted mode of investment considered by many individuals. People who are looking for assured returns tend to go for real estate investment. For most of us, property investment is buying the property and selling it. Some people purchase land, develop it and put it on rent which again becomes a mode of assured income for them. But, real estate investment has much more to it. If you too are planning to invest in real estate and are looking for some good option, then read ahead. This guide will help you in making the right investment decision in real estate.
Understanding Earning option:
If you are planning to invest in real estate or put money into it, then it becomes imperative that you must choose the right property and calculate the earning options as well. Many a time, the land price may not appreciate, in such a scenario, your money will become stagnant. Hence it's essential that you must calculate the earning options and its price appreciation in the future. Here are the different ways of calculating your earning option:
Non-ownership option- Well, most of us know that owning a property is the best way of investing. However, there are other ways also which can give you the benefit without actually buying the property, and one of it is a real-estate exchange or anyone else you can invest in Real traded funds or you can invest in real estate investment trust or REITs like Fundrise. It gives leverage to the investor to invest in real estate projects, and you can decide the amount that you want to invest in a particular project.
Rent- This is the most conventional form of investment which allows the investor to put their property on rent, and you can get a continuous flow of money via rental amount.
Appreciation- Well, this is a tricky affair, but if you plan wisely, then you can get great benefits from it. What people do is buy homes and then sell it when the price appreciation. Some people also buy a house, renovate it, and then sell it off. But, again, this involves a cost, so you must calculate before taking any step.
ETF and Mutual Funds- These are a common mode of investment that you can adopt, what you can do is invest in ETF and mutual funds of real estate.
Crowdfunding – One of the recent and the most popular option that has emerged is crowdfunding. Wherein you can invest in real estate projects or fund real estate startups. You will get a share in the property or the earning of the company. You can find many websites offering the facility of investing in real estate projects.
Real Estate syndications- In today's time, you can find many ways of investing in property, real estate syndication, which is similar to crowdfunding, are helpful in this. There are many companies like Crowdstreet, which are providing an excellent platform for real estate investors. In the real estate syndication, an operator finds a large real estate deal which they want to buy and then looks for investors to raise the rest of the capital. It is like a partnership where projects which amounts say Rs. X million, now the operator invites 50% of Rs. X in the project and he looks for other investors to invest the remaining 50% amount of X into the project. Another way in which this is different from crowdfunding is that it offers a range of properties for invest without actual real estate ownership, but this is not the case with syndication where you the into gets to invest in a single project or property or lend money on deals.
Private equity funds – Another way of investing in real estate for a beginner is to start with private equity funds platforms. Here also, the investor gets to spend in the real estate project or property, but they don't know the exact property. Usually, a fund manager does this work for the investor. Anyone who is willing to invest in private equity funds of real estate relies on the previously earned profits and reputation of the fund manager. So, it is a bit of risk; end of the day, investment does involve risks, but when the returns are good, then they account for a sizeable amount.
Wrapping it up- With a bit of sleuthing and research, you can easily find out about the different modes of investment into real estate. However, you must know here that not every option will be right for you and will fit in your budget. So, if you are starting new in real estate investment, then the options mentioned above will be good for you.