If you ask any investor, many will tell you real estate is one of the best places to put your money – reason being that real estate and land keeps on appreciating. This form of investing offers less risk than investing in the stock market. Although the real estate field has plenty of opportunities for growth, buying and owning property is a bit more involving than investing in bonds and stock. Whichever way, starting any form of business be it a towing service, cargo service, courier service, just to name a few, and seeing the success in such businesses is not easy.
Although real estate investment is not for everyone, it can be very lucrative. There are many ways to invest and here are a couple of such ways.
Buying a Rental Property
This is the simplest and pretty a straightforward way of investing in real estate. To do this, you purchase a house and rent it out to a tenant. Ideally, the landlord charges substantially enough rent to cover for mortgage and other costs. A landlord may charge more to produce a profit at the end of the month. Furthermore, the property may have an appreciating value over the course of the mortgage, to leave the landlord with a more valuable asset.
Real Estate Investment Groups
If you want to own a property but you don’t want the hassle of landlords pass through, a real estate investment group may be the right solution for you. In this form of investing, a company will buy or build a set of apartments, houses or condos and gives a chance for investors to buy them through the company, thus joining the group. A single investor may buy several of the houses or apartments, but the company operating the investment manages all the units. The company caters for all the maintenance, advertising, and allocation of tenants.
Real Estate Flipping
Real estate flipping, also known as wholesaling involves traders who buy property with the intention of holding such assets for a short period, to gain value before reselling them. Flipping method of real estate involves buying properties that are either significantly undervalued or ones that are in high demand in the market. Pure flippers do not put any extra money on improving the house. The investment has to have sustainable intrinsic value to turn a profit without any alterations.
Investing in real estate grants an investor one tool that is not available in the stock market, and that is leverage. When you want to invest in the stock market, you have to pay the full value of the stock at the time you are placing the order. Even when buying on a margin, the amount you are able to borrow is still much less as compared to that of real estate.
When you are acquiring a real estate property through a mortgage, in most cases, mortgages require 25% downwards, up to 5%, depending on where you live. This means you can control a property and the equity such a deal holds by only paying a fraction of the total amount. This is what makes real estate flippers succeed in their industry. You can even take a second mortgage depending on the payment percentages and still make a profit.