Setting your foot in the real estate world is more than finding a habitable place to call home sweet home. Over the past fifty years, investing in this sector has become an ordinary investment tool for many individuals. Although the real estate marketplace is loaded with good opportunities for making eye-popping money, owning and purchasing real estate is a lot more convoluted than investing in bonds and stocks.
In this guest post, we’ll go beyond purchasing a house and introduce you to some well-tested real estate investment strategies that will help you earn a phenomenal income.
Invest In a Rental Property
Purchase a property and rent it out. Here the landlord is wholly responsible for paying the taxes, mortgage, and costs related to the maintenance of property. Ideally, the landlord charges rental fees that easily cover all these costs. In general, landowners charge a good amount, in order to get good profit.
Join Real Estate Investment Groups
People who are willing to be the owner of a rental property, but don’t want to get trapped in the responsibility of being an owner, these groups are the way to be. A company will purchase or construct a set of condos or apartments and then allow investors to buy them through the company. A single investor can purchase a single unit or many. The company operating a specific group manages all the units collectively and in return the organization takes a percentage of the rent.
Real Estate Trading
This is the wildest side of investment in real estate. The real estate dealers are a completely different class from the buy-and-rent landowners. These dealers procure properties and keep them only for a small duration like five to six months and then they sell them for a profit. This strategy is also known as flipping properties and is mainly based on purchasing land pieces that are either undervalued or grab the attention due to sky-high prices.
Real Estate Investment Trust
Real estate investment trust or REIT is created when a trust or corporation makes of their investors’ money to buy and manage income properties. Just like any form of stock, REITs are procured and sold on the prominent exchanges. A corporation or trust must pay out a good percentage (90%) of its taxable income in forms like dividends. Through this, REITs don’t pay corporate tax, while a regular company would pay corporate income tax.
This is one such tool that is available only for real estate investors. If you wish to purchase a stock, you have to pay the full amount of it. Even if you are procuring on margin, the amount you can borrow is still less. The Majority of mortgage demands for 20% down payment. But, you can go for other types of mortgages that require less than this percentage. It simply means that you can have power over the entire property and the equity it holds by paying only for a very small amount of the total cost. In the end, your mortgage will pay the remaining value of the home at the time you bought it, but you own it the moment you sign the papers.
Last but not the least, before diving into the world of real estate, weigh out the pros and cons very carefully and make smart choices to make the most out of your investment.
Amaya Bell is an experienced writer who loves to write on different topics such as Real Estate, Travel tips and tips for how to find perfect Rent Apartments in London.