The Best Ways to Invest in Real Estate

Real estate investments can prove lucrative when executed well. Purchasing one or more properties is a great way to grow and diversify an investment portfolio, generate a superb passive income, and save for a comfortable retirement.

As you will want to receive an excellent return on investment (ROI), it is wise to consider all your options and pick the best path for you. Continue reading to learn about the best ways to invest in real estate.

House Flipping

House flipping is a worthwhile consideration when attempting to grow your finances. To get started, you must browse the real estate market for an underpriced home in a great or up-and-coming neighborhood, affordably renovate it, and resell it to earn a large ROI.

Unless you have a huge sum of money in the bank, you must seek financing to fund the property purchase and its renovations. Many house flippers often turn to quick hard money loans to fund a project, as it is secured by an asset, such as real estate. Plus, you don’t need a great credit history for a successful application.

Rental Properties

If you like the idea of becoming a landlord and have great DIY skills, one or more rental properties might be right up your street. However, you must have much time and patience to manage tenants, execute repairs, and resolve various problems that may arise.

Rental properties require a substantial amount of capital upfront. In addition to purchasing a property, you must have money available to pay for maintenance and repair costs, and you will need to cover the mortgage when the property is empty or tenants fail to pay their rent on schedule.

REIGs

Real Estate Investment Groups (REIGs) are a wise pick if you want to invest in real estate without the worry of ongoing management. It is like a small mutual fund that invests in property rentals. For instance, a REIG will build or buy condos or apartment blocks, and investors can buy one or more units, but the company will manage it each day. As REIGs are responsible for marketing, tenant interviews, maintenance, and repairs, they will take a percentage of your monthly rental income.

REITs

If you like the idea of investing in property without the stress of caring for it, real estate investment trusts (REITs) are worth your consideration. Again, it is similar to a mutual fund, but this time companies will own commercial buildings, such as retail spaces, buildings, hotels, or apartments.

It is a popular retirement investment option, as it pays high dividends, which you can reinvest to grow your finances. However, REITS are a little more complicated than the above options, as some are traded on an exchange like stocks. Also, it is harder to sell non-traded REITs, and you might struggle to sell them for their full value. However, they are a superb way for everyday investors to invest in large-scale, non-residential investments they couldn’t buy directly, such as owning a share of a mall or office building.