How to Invest in Real Estate : The Complete Guide

Introduction

Investing in real estate investment is a good idea for the business. Real estate investment is not only the business for billionaires. An average person with average money can also invest in real estate. You can start your real estate investment with even $500. There are a lot of real estate investment options available.

What is Real Estate Investment?

Investment properties has many types.  Selling and purchasing of lands, buildings and houses are known as real estate investment. Here are some types of real estate:

Residential Real Estate

This type of real estate investment includes all the residential properties such as apartment buildings, residential flats—holiday properties and all the other places where people live. One of the easiest ways to invest in properties is to invest in residential properties.

 Commercial Properties

This type of real estate investment includes all the properties used for business purposes such as offices, retail storefronts and commercial shops. As compared to residential real estate, this type is more expensive, and also you will have to manage more properties. The easiest way to invest in commercial properties is to invest through a real estate investment trust where you can buy shares in the properties.

Industrial Real Estate

This type of real estate investment includes warehouses, storerooms and other industrial level buildings.

How Do You Invest in Real Estate?

Properties investment is a tricky and risky business. Always invest that much of money that you can afford to lose. It is essential to decide the amount of cash you can use for the investment. For instance, if you are willing to invest in CRE, you will need at least $50,000. But if you think that this much of cash is more than you can afford, then there are always other less expensive options from where you can start.

The time factor should also be kept in mind before investing in properties. It is not easy to maintain a property when you are willing to sell it after you have invested in it. Maintenance and management of these properties can also be through paid companies.

It is also essential that you consult with an experienced lawyer who will help you with your first investment. The lawyer will help you invest through limited liability companies instead of investing by using your name. This will save your other assets from any lawsuit in case of investment failure.

Following are some options for you to invest in properties:

Rental Properties

One of the easiest ways to start investing in real estate to buy properties and rent it out. If you think that you can manage the properties and do the maintenance, then this can be perfect for you. Investment in rental properties has many advantages. Rental properties can bring a lot of money for you through rents. These properties are less likely to spend your extra money on taxes.

On the other hand, this can be a tiring investment for you by continuous maintenance of the property. Most people who will rent your property won’t leave it as you give it to them. Also, you will have to wait for some tenant to rent your property so that the income can start coming.

Real Estate Investment Groups (REITs)

This is a good option for those who want to invest in rental properties without saving themselves from the headache of managing the property. You can invest through an investment group which buys rental properties and allow different investors to purchase those properties through the group. In this way, you become a part of a mutual fund.

One investor can invest in multiple properties in this type of investment through the investment group. REITs will manage the properties and tenants. In return, they take a commission from the monthly rent. This is an easy way to invest in real estate, but you have to make sure that you are investing money through a trusted and efficient properties investment group. Otherwise, there is a risk of losing money.

House Flipping

If you have a piece of adequate knowledge in properties and market, then-House Flipping is a very suitable option for you to invest in. You don’t have to hold on to your property once you have bought it. If your good market knowledge, you need to know the right time to sell your property with profit. The real estate market can change within days; this can be an intricate part of the investment.

Real Estate Investment Trusts (REITs)

In this type of real estate investment, you invest your money through trusted corporations. These corporations buy properties from your money, and you get profit based on the value of that property.

This is like investing in stocks, corporations pay you 90% of the profit, and you even have the option to cash out anytime you want regardless of the status of the property. Trusted companies are responsible for all the management work.

How Do You Invest in REITs?

You can invest in REITs through brokers as you invest in stocks. You need a few thousands of dollars to support. Choose equity REIT over mortgage REIT which will be a good option for you to start as a beginner. You can choose to buy or sell shares at any time you want.

How Do You Invest in Real Estate Crowdfunding Platforms?

There are several crowdfunding platforms through which you can invest in properties. There is no limitation for those who have a net worth of over 1 million dollars. Diversity Fund is a suitable crowdfunding platform through which you can invest for $500, and you don’t even have to worry about management fess. Fundraise allows you to invest for $500, and as soon as your profit/investment reach $1000 mark, it will enable you to upgrade your investment plan.

Summary

Real estate investment is an excellent investment to start your business. There are several investment options through which you can get going in this field. You should have research about the different types of properties investment and then choose the preferable option for you. You can invest in rental properties directly and also through investment groups, or you can also invest in properties while putting your share in the real estate market.

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