You must have been investing in bonds and stocks. Investment in stock market is a horse of a different color. You sometimes swim or you sink. But you know what is to be done. When it comes to real estate, investment is a tricky space. In this article, the discussion around buying a house is deliberately put on the backburner. On the contrary, the article will cover tips and tricks on prudent investing in real estate industry.
What makes real estate a worthwhile investment avenue? ROI is certainly an important barometer, but phenomenal builders and developers also provide a smooth field for investors.
1) Basic Rental Property
You might already be practicing this. A person will buy a property and rent it out to a tenant. The owner, orlandlord, is responsible for paying the mortgage, taxes and costs of maintaining the property. Ideally, the landlord charges enough rent to cover all of the aforementioned costs. A landlord may also charge more in order to produce a monthly profit, but the most common strategy is to be patient and only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit.
2) Real Estate Investment Group
A company will buy or build a set of apartments or condos,then allow investors to buy them through the company (thus joining the group). A single investor can own one or multiple units, but the company operating the investment group collectively manages all the units,taking care of maintenance, advertising vacant units and interviewing tenants. In exchange for this property management, the company takes a percentage of the monthly rent.
3) Real Estate Trading
Real estate traders buy properties with the intention of holding them for a short period of time (often no more than three or four months) and selling them for a profit. It is called flipping properties.
4) Real Estate Investment Trust
A real estate investment trust(REIT) is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges just like any other stock.There is also leverage that a stock market investor does not get.Leverage works in your favor when it comes to real estate investment.