Table of Contents
Introduction
Real Estate investment is the preparation of buying property as an investment rather than a main residence to generate income. It can be defined as any land, structure, infrastructure, or other assets that are often immovable but can be transferred for profit.
The real estate business has been an essential component of wealth for thousands of years. The main object of investment in this field is to buy properties to generate income and capital appreciation. Residential, farmhouse, commercial, retail, and recreational examples fall into this category.
We frequently receive emails from our devoted readers inquiring about various real estate investment options. It’s not surprising that most of them feel that investing in residential homes is the easiest and most efficient way to proceed. However, by delving deeper into the business and educating them on its complexities, it’s interesting to see how their eyes light up with the realization that there’s a whole new universe out there when it comes to real land investment.
Purchase from a Wholesaler
There are several avenues to invest in real estate, including residential, commercial, and even real estate investment trust (REIT). However, one of the most acceptable ways to invest in real estate, particularly amid this current global health crisis, is to acquire homes from a wholesaler (someone who deliberately discovers houses in need of repair) and flip them for a profit. Purchasing a property through a wholesaler will often result in a better value than buying through multiple listing services (MLS), as you will avoid paying agent fees (which in most areas are 6 percent ).
Invest with a Trustworthy Hard Money Lender
Investing money with a hard money lender is another beautiful strategy to invest in real estate for a high rate of return with a secured investment. A hard money lender is a corporation that loans money to real estate flippers at a high-interest rate (13 percent or higher) while ensuring the loan with the underlying asset (the property).
Investors often receive a 10% return on their investments from reputable hard money lenders every quarter. Investors do not need to be accredited to qualify; nonetheless, these products often have minimum buy-ins. COVID-19 has did not affect these assets since they rely on flippers continuing to flip houses — house flipping has not slowed throughout the epidemic.
Hire Property Management Services for Rental Properties
Rental properties are one-of-a-kind in that they can be either passive or semi-passive investments. Self-managing a rental is still substantially less effort than flipping a property, but it still needs management and tenant contact. You will also be handling/delegating any maintenance issues, as well as difficulties with missed rent payments and evictions.
If you employ a property management firm, there will be a system to handle all tenant contacts. Rent collection, upkeep, and evictions make this a passive investment. However, in exchange for their efforts, the management business will receive a portion of the profits.
Think about REITs.
Last but not least, because they are entirely hands-off, REITs are an extraordinarily effective vehicle for investing in real estate. The management is usually an elected board with a long track record, and REITs are highly liquid, making them a quick and straightforward option to invest in real estate.
During the epidemic, various REITs were hit in different ways. Business REITS were the worst hit since commercial renters had difficulty paying throughout COVID-19. It has resulted in a massive reduction in stock values. REITs have a lot of opportunities to develop right now, but there is also a lot of uncertainty.
Conclusion
We hope these examples help you on your way to becoming a real estate investor. It’s comforting to know that there are several feasible alternatives available; the key is understanding where and how to invest based on your risk tolerance and knowledge.