Real estate has long been considered one of the safest and close to assurance on return on investment. Let’s face it; more and more people are being born, more businesses and companies are growing, providing a steady and growing market. What makes real estate a more exciting investment strategy is that unlike bonds and stocks, investors may use their investment as leverage to acquire or purchase another property. If you are unsure of how to make a real estate investment, these four tips should help you to make wise decisions.
Be a landlord
Being a landlord is best suited for investors with renovation, DIY skills, and the patience required to cope up with tenants. However, the initial capital required is usually high for finance maintenance costs and to make up for vacant months. On the positive side, rental investment provides a regular stream of income and can also be used to maximise capital gains through leverage. For maximum profit on a rental property, landlords opt to hire property management companies as tenants can at times be rowdy and damage property.
Join a real estate investment group
For investors who wish to join real estate without necessarily facing the hassle of running it, real estate investment groups are the place to be. All an investor requires to enter a real estate group is access to financing and capital cushion. The advantage of such a group is that it provides a more hands-off investment approach that still yields appreciation and income.
Flipping is a form of investment that includes real estate trading. It is more suitable for investors who are well versed in marketing and real estate assessment. All a prospective investor requires is the skills to oversee repairs and capital to invest. Additionally, the time frame in tying up money and effort is usually short. Flipping can, therefore, realise high returns even within a shorter period depending on the market conditions.
Real Estate Investment Trusts (REITs)
REITs are suitable for investors who wish to venture into real estate without a traditional real estate transaction by using portfolio exposure. All a prospective investor requires is investment capital. As REITs are essentially dividend-paying stocks, investors get to earn money through cash producing leases. However, this means that leverage, in this case, does not apply.
Deciding on a suitable type of real estate investment inevitably depends on a number of factors, so it is essential that you are able to make an informed decision.