Real estate is one of the investments that have stood the test of time. People will always need a home and a place to stay. Experts claim it is still one of the best investments to make. It has made many people wealthy and has made many dreams come true. The best thing about real estate is that it is a tangible asset. What’s more, you have the option to sell it later should you wish to switch to another investment.
If you have an existing home loan, you might want to consider if your financial institution offers clients to refinance your mortgage. This allows you to get loans at a lower interest rate and shorter mortgage terms. You can use the cash to make a real estate investment that will grow your money.
Here are some real estate investments that you can consider.
1. Real Estate Investment Trust (REIT)
A REIT is a company that owns and operates real estate properties that make an income. If you are familiar with mutual funds, then you will quickly understand how a REIT is modeled. REIT pools together the investment made by different investors and use it as capital to fund their businesses. When you invest in a REIT, you can earn from dividends earned from real estate properties, without buying or managing these properties.
REITs usually invest in apartment complexes and buildings, hotels, medical centers and facilities, office buildings, warehouses, infrastructure, and retail centers, among many other real estate properties. Some REITs specialize in one sector of real estate while some invest in different real estate properties.
Like with stock units, you can buy and sell REIT units. They are usually traded in bigger volumes and can be considered as a liquid investment.
2. Residential Real Estate Properties
Residential real estate can be a single-family dwelling, vacation home, or a condo unit. You can rent out these properties to tenants for short term or long-term durations. One of the critical factors that you should consider when choosing to invest in a residential real estate property is its location. Choose a desirable and promising local market. A place with a substantial house price appreciation (HPA) is your best bet. Stay away from areas with slow economic growth and poor business health.
Some real estate beginners buy a house or condo with two to four rooms. They live in one room and rent out the rest. Many real estate investors started with this easy setup. The rent that you will collect can cover your expenses, and soon enough, you will see returns for your initial investment. This strategy is called house hacking, where you rent out parts of your residential home, allowing you to earn income, which can help you cover your mortgage and other financial obligations.
3. Flipping Real Estate Properties
If you have enough funds, you can buy underpriced homes that need renovation and some of your magic touch. You can then sell it for profit at a much higher price. This type of real estate investment comes with some risk. You must be accurate in doing the math on how much the repairs and renovations will cost. You want to renovate and repair it as inexpensively as possible, yet you also want the output to be beautiful so you can sell at a higher price.
You must have a trusted partner who can do the estimates for you and can help you manage your renovation project.
4. Bedrooms for Transients
If you have a home with an extra bedroom to spare, you can rent it out for travelers and transients. It is perfect for those who do not want to manage long-term tenants. You can start renting it out to people who know your friends and relatives who are in your area for work or leisure. However, you might want to be extra careful with this setup with the current COVID-19 pandemic. It can be risky, especially if you have elderly and children staying with you.
5. Commercial Real Estate
Commercial real estate properties are structures for business purposes, workspaces, and offices. These properties are usually leased to companies and business owners. It can cater to a single or multiple storefronts, or even a sprawling shopping center. You, the owner of the property, can collect rental fees from the businesses that operate in your property. One of the main benefits of owning commercial real estate properties is that lease terms usually last at least three to five years. Depending on the property that you own, it can last up to 10 years or more.
When choosing the real estate investment, do some research first. All investments require research and thorough planning to succeed. Create your business plan and consult with people who have been in the industry for a long time. You must also consider your situation, your time, and how much you are willing to invest in your business.
Meta title: Top Real Estate Investments that You Can Try
Meta description: Real estate has proven to be one of the best investments that you can make. Learn more here.