Real estate is among the most common and oldest classes of investing. This is not news to many new investors. But what they are not familiar with is that different kinds of real estate investments exist.
In the quest to have a passive income and financial freedom, you may decide that real estate is where you want to devote resources, time, and effort. If this is the case, the following are ways you can invest in real estate:
1. House and Raw Land
Homeownership is certainly a goal most Americans try to achieve. While residential real estate properties have their ups and downs, generally, it appreciates. Many individuals don’t purchase a house outright – they take mortgages.
Working to pay the mortgage off, and owing to the house outright, is basically a long-term investment, which may protect you against all volatilities involved in real estate markets.
If you also prefer buying your house from scratch, you may invest in raw land. But be sure you make the right choice as not every land is created equal.
For instance, if you want to get attractive house and land deals in Tarneit, Australia, you will need to thoroughly research the neighborhood, security, and availability of infrastructures.
REIGs (real estate investment groups) are suitable for individuals looking to own rental properties without the hassle of running them. Investing in these properties needs access to financing and capital cushion.
REIGs are also similar to mutual funds, which invest in rental real estate properties. In typical REIGs, a company builds or buys condos or apartment blocks, then allows the investors to buy them through the group.
One investor may own one or many units of self-contained living spaces. However, the company running the group collectively handles advertisement, interviewing tenants, maintenance, and all the units.
This refers to investments in real estate, which are non-residential. They can be retail stores, offices, warehouses, and hotels.
These kinds of investments are also regarded as active and may involve investors owning and renting out spaces to businesses that will use them. Similar to residential, you may earn extra money by selling or renting the property.
4. House Flipping
Reality TV shows, such as ‘Flip This House’, have popularized home flipping. As an investor, you may get a good return within a few weeks or months if done well.
Of course, most new investors don’t do things right and lose the cash they invested in. Even those who earn a good return get surprised at the work amount required to achieve the goal, not to mention labor, time, and money.
In order to avoid messing around with your hard-earned money on rushed renovations, consider doing live-in flips. You will just need to move into the house, which requires some updates, improve for one or two years, then sell the property and pay capital gains on profits made.
Whether all your goals are focused on long-term, short-term, or a healthy combination of both, there are several pathways you can take when it comes to real estate investment.
Doing enough research speaking to professionals, like realtors, before you get started will ensure you make the right investment decisions.