Real estate investing can be quite beneficial. It’s a perfect way to diversify your portfolio while creating passive income opportunities. As a real estate investor, you can enjoy numerous tax benefits, particularly if you consider your investments a business. Real estate investing gives you more protection against inflation and the potential to build capital. With real estate, you have many investment opportunities to look at based on your financial goals. Outlined below are five ways to invest in real estate.
Commercial real estate
Commercial real estate involves the properties used for business and residential homes with five units or more. There are various types of commercial real estate investments, including:
- Industrial real estate: It includes properties and buildings used for logistics, bigger shipping facilities, or manufacturing
- Retail real estate: They’re used to sell services or goods to consumers from physical locations. Retail includes strip malls, shopping centers, restaurants, and more
- Multi-family rentals: These are townhouses, multi-unit properties, and apartment buildings
Other types of commercial real estate to invest in include:
- Office spaces and buildings
- Hotel and hospitality properties
- Special purpose properties
- Medical and healthcare facilities
- Land
Residential properties
Residential real estate is a profitable venture for those seeking to join the real estate market. Renting out properties enables you to earn rental income regularly, contributing to your financial stability. Rental real estate tends to appreciate over time, meaning if you invest in a prime location and keep up with property maintenance, you can gain from capital appreciation. Investing in residential properties provides different tax advantages and diversification opportunities to minimize risk and balance your investment. Some of the residential investment properties to consider include:
- Single-family homes
- Condominiums
- Multi-family homes such as triplexes and duplexes
- Apartments
Real estate investment trusts (REITs)
REITs are investment companies that own, operate or finance income-generating real estate. They invest in most real estate property types like warehouses, apartment buildings, retail centers, and more. Investing in REITs offers multiple benefits, including:
- Portfolio diversification: REIT investing provides access to the real estate market with a low connection to other bonds and stocks
- Liquidity: Publicly listed REIT shares are easily traded on primary stock exchanges
- Significant, stable dividend yields: Historically, REITs dividend yields have created a steady income stream via various market conditions
You can invest in REITs in various ways, such as buying shares of REITs, investing in major stock exchanges, or a REIT exchange-traded fund or mutual fund. An investment advisor, financial planner, or broker can help evaluate your financial objectives and suggest suitable REIT investments.
Property or house flipping
When done correctly, house flipping can be a lucrative way to invest in real estate. It involves buying a property, often one that needs renovation or repairs, and then selling it for more money than you bought it for to make a profit. As a house flipper, you can also target properties with the potential for significant appreciation or foreclosure properties. House flipping can result in substantial profits, particularly when costs are accurately estimated and the market is well-timed.
Additionally, as you flip houses, your renovation and real estate knowledge improves, which can be potentially beneficial for future investments. Becoming a house flipper is relatively simple because you don’t require any licenses or special education qualifications. Also, house flipping can be done full-time or part-time based on your availability. To find houses to flip, consider:
- Networking with real estate professionals
- Going to auctions
- Scouring online listings
- Looking at foreclosure sites
- Working with an agent
- Joining local real estate investment groups
- Driving around
Online real estate investing
Online real estate investing involves putting your money into real estate opportunities available via online platforms or funds. It provides access to various real estate funds and asset options. As an online real estate investor, you enjoy the benefits of the real estate asset class without getting engaged in landlord duties and responsibilities. Online funds and platforms don’t require you to own an asset physically. You can invest in online real estate online via:
- Crowdfunding platforms: They allow several investors to put their money together to finance property investments. There are many real estate crowdfunding platforms, each with its requirements and rules for the investments one can make and who is eligible
- Real estate ETFs (exchange-traded funds): These mutual funds trade on exchanges like stocks and allow investors to possess several property types via one ETF
Endnote
Real estate investing can be a lucrative venture. Familiarize yourself with the various ways to invest in real estate.
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