Investing in real estate has been a great way to build wealth for a long time. You can rest easy, knowing its historical appreciation rates are over 8%. However, you might not know where to put your money if you’d like to invest in real estate. That’s why we’ve put together a few investment options to give you some ideas.
1. Real Estate Investment Trusts
For a lot of investors, the toughest part of buying property is coming up with down payments. Investing in a REIT lets you put money in real estate without a ton upfront.
You’re able to put your money toward existing projects. Then, they’ll send you a portion of the project’s revenue in return. It works kinda like dividends in the stock market. However, you’re receiving rental income from REITs most of the time.
Each one has a different minimum investment amount. But, many of them let you invest less than $1,000 at a time. That’s why they’re so popular among beginning investors.
2. Delaware Statutory Trusts
Before getting into a DST, consider both sides of the coin. What are the Delaware statutory trust pros and cons?
The pros would be that you’re able to defer capital gains taxes. That’s going to let you retain more of your revenue as profit at the end of the year.
Using a 1031 exchange lets you transfer property without creating taxable events. So, you’re not going to increase your liability by trading properties.
The only major downside would be that it’s a passive investment. You’re not going to be able to manage it. Most of the benefits occur whenever you’re simply holding them.
3. Property Arbitrage
The difference between how much you’ve spent on a property and its selling price is your profit. Learning how to spot properties when they’re below market price is a valuable skill.
Sometimes, you can buy something and sell it the next day while turning a profit. If you’re able to find a deal that’s way undervalued, then you’ve got to jump on it.
That’s how you’re going to make most of your money if you’re in this industry. Selling your properties for more than you bought them for is the name of the game.
Another way you can boost your property value is by putting a little work into them. Tidying up the front lawn improves a home’s curb appeal, making it attractive to buyers.
People will pay more for something if they’re fond of its appearance. So, improving your properties usually pays off if you’re trying to sell them.
4. Multifamily Rentals
Getting into the rental market is one of the best ways you can build passive income. However, single-family homes aren’t always the fastest path to that goal.
Investing in multifamily properties has a few advantages compared to single-family units. You can rent out multiple units if you’ve got one of them. As such, you can charge each tenant less, even though you’ll have more revenue overall.
You could even live in one of the units if you’re just starting a business. That way, your rental income would cover your housing expenses. You could put your usual money toward the payment to build equity quicker, too.
Eventually, you can move from multifamily units into single-family homes if you’d like. Starting in that part of the market tends to build rental revenue faster, though.
5. Online Investment Platforms
Using online investment platforms makes it possible to crowdsource funds with other investors. Pooling funds together with them could let you purchase larger properties.
Some of them even let you purchase apartment complexes, full of rental units. Finding the best deal will take a little research. Pay attention to the fine print, so you know how you’ll receive returns.
Compare what’s offered by several different platforms to see which of them has the best offer for you. That’s going to help maximize your ROI.
The Best Real Estate Investment Opportunities
Opening a new business is always something that takes work. Put in the effort when you’re first starting. It’s more than worthwhile in the long run. At some point, you’ll understand how the entire industry operates.
