Real estate investing, when done correctly, can be a profitable investment option that can help you generate high returns. It presents an excellent opportunity for anyone looking to build wealth and equity.
Unlike the highly volatile stock market, real estate isn’t susceptible to regular market swings, meaning property prices don’t change immediately depending on political volatility or capital contributions, which makes real estate a safe, stable long-term investment.
Investing in real estate can be rewarding because inflation effects hardly impact properties.
Rather than being negatively influenced, real estate investments normally increase in value with rising inflation. Discussed below are seven ways to invest in real estate.
1. Rentals
Are rental properties a good investment? While the value of rentals and appreciation rates fluctuate, it’s a certainty that the value of a rental property will appreciate over time.
In addition, when inflation increases, rent rates also rise, resulting in real estate being dubbed as a hedge against inflation because your interest rates will remain the same if you have a fixed-rate mortgage. However, your rental income will increase, making rental properties a good investment.
Rental expenses, like operating costs and mortgage interest, come with tax write-offs, helping save money.
The rental property scenery offers multiple investment options, giving you the flexibility to choose. They include:
- Multi-family homes
- Single-family homes
- Airbnb rentals
- Mobile homes and more
2. House Flipping
House flipping is a real estate investing technique where an investor (flipper) buys a property, often one that needs renovation or repair, completes the necessary improvements, and then sells it at a profit within a short period.
When it comes to this investing strategy, investors must buy low and sell high to make money. House flipping can be a lucrative venture, particularly when you’ve estimated costs accurately and timed the market correctly.
With this kind of investment, you don’t have to quit your day job because house flipping can be done part-time.
Unlike other real estate investments that require substantial capital to start, house flipping requires little to no startup capital.
This makes it a worthy venture for anyone looking to join the real estate market but lacks the financial muscle most investments call for.
3. Real Estate Investment Trusts
Real estate investment trusts (REITs) enable investors to put their money into large-scale, income-generating real estate.
They’re companies that own and generally operate income-generating real estate and related estates, including:
- Shopping malls
- Office buildings
- Hotels
- Apartments
- Self-storage facilities
- Resorts
Real estate investment trusts come in handy for investors looking to earn a portion of the income generated via commercial real estate ownership without the need to buy commercial real estate.
They provide a way to incorporate real estate into your investment portfolio. In addition, some REITs may provide more dividend yields than other investments.
4. Real Estate Mutual Funds
Real estate mutual funds are an investment that involves putting your money in REITs, properties, and other real estate-related assets.
These funds expose investors to the real estate market while providing income generation and capital appreciation potential.
Real estate mutual funds are SEC-regulated and subject to regulations similar to other mutual funds. Unlike direct real estate investments, mutual funds are more liquid, allowing investors to enter and exit positions without the challenges associated with possessing and managing properties.
5. Real Estate Investment Groups (REIGs)
A real estate investment group (REIG) is an organization that real estate investors create to pool resources and invest in properties.
The group allows individual investors to take advantage of a larger group’s resources and expertise to attain shared investment objectives.
In a REIG, all members contribute money to the group, and the aggregate capital is used to buy, manage, and possibly sell real estate properties.
Investing in REIGs allows you to benefit from real estate ownership and potential returns without being actively involved in property management.
It also enables you to diversify your holdings by combining resources with others and spreading risk across several locations or properties.
6. Digital Real Estate
Digital real estate includes any digital asset you own, including websites and domain names. Investing in digital estate lets you make money in various ways, including:
- Buying/ building sites: You can purchase an existing, undervalued website, improve it, and resell it at a higher price. Additionally, you can build one from scratch and then sell it for a profit
- Renting out: If you have a website or domain name whose demand is very high, rent it out to persons or businesses at a fee
- Digital product sales: Based on your expertise, you can produce and sell digital products such as software, e-books, or online courses
7. Buy A Home
Buying a home is another way to invest in real estate. It lets you build equity on the property through your monthly payments instead of paying rent, which is more affordable than paying rent.
Upon building sufficient equity, you can take a loan against it. Additionally, your home’s value can appreciate over time, which comes in handy when looking to sell.
Endnote
Real estate is a safe and stable investment that enables you to earn income passively. Use these ways to invest in real estate.
