Easy Ways to Invest In Real Estate

As an investor, real estate is one of the many options you can consider to expand your portfolio. It comes with many benefits including securing your future, buying a home and making money from renting out the real estate property you buy. If you are starting out, it is imperative to keep in mind the advantages and risks that come with real estate investment so that you make the best decision for your money. Once you have decided to invest, here are a few easy ways you can start out with:

Buy to rent

With buy-to-rent properties, you will be able to pay the mortgage on your property through the income generated from the tenant. If you select this option, you will be responsible for the expenses that come with renting out, including maintenance costs and taxes Ensure that you do your due diligence to make sure that the investment is worth it. Remember, the rent will depend on the market rates without affecting your mortgage. You should also make sure that you choose a property in an area where people would like to live so that you can get tenants easier. Consider the kind of tenant you want on your property before making a decision.

Consider investment groups

If you do not want a rental property, consider joining an investment group. With these groups, a company buys or builds property and lets a group of investors buy them through the company. Although you can own one or multiple units, all management responsibilities fall on the company. The company will also take a percentage of the monthly rent to cater for the maintenance, mortgage insurance, advertisement of vacant units and others. It is important to note that mortgage insurance is different than homeowners insurance, also known as home insurance, and it is wise to have both. Keep in mind that some investment groups require a percentage of the rent for vacant units. Ensure that you find out more about the agreements before signing up for such an investment.

Buy to Sell

If you are not interested in the two options above, consider flipping properties as a way of investing in real estate. This is the process of buying property, holding it for a few months with the intention of selling for a profit. It comes with a number of pros including the potential to make quick money and you will be able to learn a thing or two about construction, real estate and market demand. However, you need to be careful not to make mistakes that might cost you. Keep in mind that you will need adequate time, as renovation is important to boost the value of your home when reselling. From finding the right house, buying the property and fixing it up, you will need quiet time and patience so that the investment can be worth it.

Real Estate Investment Trust

A real estate investment trust (RIET) will invest your money to buy and operate income property. It is a good plan as it allows both small and large investors to own real estate and commercial property as well. REITs come with a number of regulations, including having at least 100 shareholders; at least 75 percent of the assets must be in real estate, cash and government securities and 75 percent of the gross income come from rent, mortgage, and real estate investments. With REIT, you will benefit from high yields, simple tax improvement, and diversification.

Leverage

You can also consider leverage as an investment strategy to increase your potential of earning returns on your investment. This means that you use borrowed money to pay a significant percentage of the cost that enables you to buy a more expensive property that you could have bought using the available funds. If you are not comfortable with using leverage directly, you can invest in companies that use leverage to finance their operations. Depending on the decision that you take, make sure that you weigh your options, do your research on the benefits and costs of each before making your investment.