3 Simple Ways to Invest in Real Estate

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Real estate has been a solid investment for long-term investors to safeguard their capital. The sector is not very volatile and is considered as one of the safest options for an investor looking to invest. With the current market scenario, many investors are now looking to find consistency in the market which is provided with real estate investing.

There are many ways one could enter the real estate market. If you are planning to do so, below are 3 simple ways to invest in the real estate market.

Rental Properties

Investors can purchase properties and give it out on rent to businesses looking to open a new branch or to entrepreneurs looking to start their business. This way is a great opportunity for investors who have good renovation skills and the patience to manage the tenants. However, an investor might need a good amount of capital in this form of real estate investing to purchase the property before giving it out on rent. Moreover, they would also require a substantial capital to finance their maintenance costs and cover while the property is vacant.

Real Estate Investment Trusts (REITs)

REIT investing is the perfect choice for investors who want to build a portfolio in the real estate sector without having the traditional real estate transaction. REITs use the investor’s money to buy and operate money-generating properties. These REITs can be easily purchased and sold on major exchange platforms, similar to stocks. This benefits the investors as they gain 90% of its taxable profits in the form of dividends which can prove to be a stable side-income.

Online Real Estate Platforms

There are numerous platforms that allow investors to join others in investing in big commercial or residential deals which is known as real estate crowdfunding. While this still requires funds to invest, it still requires less capital comparatively. These platforms look to connect with investors who are looking to invest in the real estate sector but have inadequate funds to do so. Investors should invest through these platforms and diversify their investment portfolio with not much money.

Why Should I Add REITs to My Portfolio?

The real estate sector does not correlate to the market conditions of stocks, bonds or commodities. These investments can generate income through various ways such as rents, mortgage payments, etc. along with the potential to gain profits. Due to this, many experts suggest investors to add real estate assets to their investment portfolio.

What Is Direct vs. Indirect Real Estate Investing?

Direct investing — In this form of investing, investors own and manage the real estate properties in the traditional way.

Indirect investing — In this form of investing, investors do not physically own a real estate but invest into pooled vehicles that own and manage properties such as REITs or real estate crowdfunding. Investors own a part of the property by purchasing real estate assets but have no physical proof to show.

Every way of entering the real estate market has their own perks. An investor should know their requirements before making their decision.

We hope this article was informative and you enter the real estate market through a way suitable to you. Thank you!