So, you want to become a savvy investor. After all, you know that saving money alone won’t cut it; you also need to invest a portion of your income to become financially free down the road. And while many people seem to think that investing refers solely to stocks, those who go the traditional route still believe in real estate investing.
If you’d like to collect tips and practical advice on real estate investing in various parts of North America, get a head start by checking out bestrealestatedirectory.com.
Once you’ve done that, you should also begin researching on the best ways to invest in real estate, whether that’s buying a rental property, flipping houses, investing in REITs or real estate investment trusts, and more.
Whatever it is that you choose to dive into, it’s essential to educate yourself and manage your expectations. After all, real estate, like other investment vehicles, has its accompanying risks and benefits.
Here are the top ways you can consider investing in real estate:
1. Get a Rental Property
Perhaps the traditional way to invest in real estate is still through a rental investment. You can do this by leaving your first home after acquiring a second one, and then having the first one rented out. It’s the best way to cover the remaining expenses on your first home while still making it a money-making machine.
Or you could intentionally purchase a property or number of properties and use them for your rental business. Either way, the goal should be to charge enough rent to cover expenses, including mortgage, insurance, property taxes, and the cost of repair and maintenance.
Being a landlord for a rental property business is no easy feat. First, you need to make sure to get the right tenants, charge the right rent, and hire the right property manager if necessary. You also need some money up front because repairs, maintenance, and mortgage will come whether or not your property is occupied.
But once you get your groove, and figure out how to best run a rental property business, most things should be smooth sailing for you. Sooner or later, these investments should provide you with a semi-passive source of income.
2. Flipping Properties
Flipping properties follows the popular concept of “buy and sell.” First, you scout for a property that’s selling for a low sticker price but needs some cosmetic and structural work. You renovate the property and then sell it for a profit. To effectively flip houses, you need to have a keen eye to determine which properties are worth the work and money.
Like anything, flipping properties has its downsides, too. You need to anticipate that it might take some time before you can find a buyer or sell the property at a profit you want. It’s a big chance to take, but if you make it work, it can also quickly turn into a lucrative income.
3. Real Estate Investment Trusts (REITs)
If investing in real estate is appealing to you, but you lack the time and knowledge to make it run, then real estate investment trusts (REITs) are the best option.
With REITs, you’re investing in real estate as you would in the stock market. You shell out some capital, pick your investments, and wait for the dividends. You get to choose between investing for a mortgage, equity, or hybrid. What makes REITs a great choice is that it gives your portfolio exposure to the real estate niche. It also requires lesser work and earns you monthly income passively.
4. Home Ownership
Finally, let’s not forget that to own property is, in itself, an investment. Your home or primary residence might not make you money as you would with house flipping or a rental home business, but paying it off and getting equity over the property makes it an asset that can be useful in the long run.
Since a home is a basic need, you have more confidence and peace of mind that this asset will shelter you—pun intended—regardless of the housing market. It is even recommended to pay off your primary residence first or build as much equity over it before venturing to other forms of real estate investments.
Final Thoughts
Whether you like to be hands-on or you want to delegate the investment to a company, it is essential to check your risk tolerance profile, current financial standing, and financial goals to see if any of these real estate investments could work for you.