Ways to Invest in Real Estate
In early 2000, investing in real estate was a popular investment vehicle, but it has become increasingly unpopular due to the housing bubble bust that left many investors broke and in dire straits.
There are many different ways to manage your mortgage and guide people through the process, but I want to point out a few ways that still make investing in real estate a viable option.
Investing in real estate is more complicated than working with the stock market. There are just as many websites out there that boast great real estate tips as there are Internet stock sites, but it’s hard to know whom to trust.
Investing in Rental Property
With the average number of homeowners in decline and an increasing average of mortgage holders defaulting on their home loans, rental property has become a popular option for those who find ownership unnecessarily burdensome due to things out of their control (i.e cost of living increases).
Currently, landownership has proved to be a solid investment. It’s a simple matter of supply and demand. Purchasing property for renting purposes is becoming a popular way for people to become financially solvent because of the steady revenue stream that it provides.
The property owner, or landlord, is responsible for the mortgage and additional costs of upkeep, and but any additional money received from rent that surpasses these costs is your net earnings. As the mortgage is paid down so will the profit from the property.
Investing with a Real Estate Investment Group
There are real estate investment groups (REIG) that are designed for investment purposes. They’re similar to a mutual fund but on a smaller scale. This is designed for people who want to own rental property, but they don’t want the hassle of being a landlord.
A real estate investment group owns a block or series of apartments or condos, and allows investors to buy them through the company. A single investor isn’t the sole owner of a property but is a shareholder of several properties along with other investors.
The company takes care of the maintenance, advertising, and interview process, and in exchange, the real estate company is given a percentage of the monthly rent. This has proven to be a solid investment strategy for many looking to diversify their holdings.
Investing with a Real Estate Investment Trust
Another option for investors is a real estate investment trust (REIT). This is, in a way, a marriage between Wall Street and real estate. A REIT is created when a corporation or trust uses investors’ money with the purpose of buying, operating, and managing income properties.
These properties are bought and sold on the major exchange like any other stock. This is a way to provide a regular income to investors. These properties usually include non-residential properties such as malls, office buildings, and other commercial properties. These are highly liquid investments and you don’t need a realtor in order to invest.
These are some of the different types of real estate investments but this is, of course, just a surface sketch. There are innumerable variations on these types of investments that always possess a level of risk, just like any other investment.
There’s great potential here but, as the market has shown us in recent years, it’s important to be careful and not buy into fad investments. Weigh the costs and benefits before acting, and do your research to find yourself in better financial standing.