Most people are scared by the idea of investing in real estate, but the Real estate is one of the best long-term investment options and a way to diversify your investments. With all the uncertainty in the stock market and the looming recession, many people are hesitant to invest in stocks. They may feel they are not qualified to do so, as stock markets are volatile.
If you're one of these people, you may wonder what an alternative way to make money and increase your financial status is. Think of investing in real estate now. But how to start is the actual question. This article will explore five simple steps to invest in real estate holding properties. So, let’s dive in!
Five simple ways to invest in real estate
Investing in the property market generally requires a lot of capital investment. But what if you don't have a huge sum to invest? Here are some ways to invest in real estate without much capital:
- Real Estate Investment Trusts (REITS)- REITs are companies that invest in commercial real estate and make either debt or equity investments. To allow investors to profit from investing in real estate, REIT (Real Estate Investment Trust) was created back in 1960. This type of investment maintains a 7-8% return, but it is available to a limited number of people with smaller sums of money.
Fund investors in a REIT can feel like they're part of the action because they can earn money just by holding shares in the REIT. It's like buying a fund and earning a return on what it does. Per the REIT guidelines, at least 80% of the fund must be invested in revenue-generating assets, and 20% can be invested in under-construction projects. Investors invest in REITs for a higher return.
- Property Flipping- Real estate wholesaling is a good way to get into the real estate industry, as you don't need many starting funds. You'll be competing with other investors already "in town"! Property Flipping is a process of investing in fast-appreciating housing markets to sell them for profit.
The "Flipper" or investor enters into a delinquent contract to buy a property that they believe is under-priced and then sells it to the end-user, who will reap the benefits of the current market boom. The process helps to familiarize a beginner with the real estate market and provides them with valuable negotiation skills.
The wholesaler earns revenue via a percentage fee attached to the transaction as part of their commission for introducing a buyer and seller together.
- Real estate Mutual funds- One of the best ways to diversify your real estate investments is by investing in mutual funds. You have a share in a specific fund, while the company owning it controls what they do with that investment. The earnings come in the form of dividends or an amount proportional to the appreciation of your shares.
Real estate mutual funds mostly invest in REITs, real estate stocks, and direct purchases of residential, commercial, and industrial units. The option favours small investors unwilling to invest in real estate directly. An important point to consider here is that the earnings from real estate mutual funds depend on several factors, including demand, supply, demographics, market conditions, and interest rates.
A real estate mutual fund is a great investment and a way to take part in appreciating real estate prices. Still, if you don't have enough money, it would not be easy to purchase property even in big cities such as Mumbai and Delhi, where the market has been very good.
- Hard money loans- Hard money loans are an excellent way to finance investments. They typically last for a shorter term, which is usually given based on the value of the property in question. We can provide you with a hard money loan that will be tailored to your needs and offer you all of the support you need to make your business dreams come true.
The lender usually provides up to 70-80% of the property value and gets paid through interest payments. This can be more than what you pay for a conventional property loan. If you're interested in the housing industry but would rather avoid the problems of being a landlord, you can invest through any of these channels. But for beginners, getting advice from an experienced realtor is always good.
- Online investment platforms- Online real estate investment platforms pool funds from many investors and invest on their behalf in properties which are otherwise too expensive to explore. All investments usually cover various properties, such as residential houses, commercial outlets, etc.
If you have some spare cash, we have great news. We've expanded our focus on both commercial & residential realities and now offer the opportunity to invest in your dream home or a diversified portfolio of properties. However, this process is best for people who don't need to move their investments around often.
Wrapping Up
The recent influx of real estate projects indicates the times we're living in. With low-interest rates, many investors are looking for ways to take advantage and go with something tangible like bricks and mortar.
Conduct thorough research beforehand if you're considering investing in a property development project. Saya Gold Avenue the address of High life, offers excellent value for money, and our team is available to help you every step of the way.
No comments yet