Real estate investment can be a lucrative business if you do your research and make the right moves. In fact, 90 percent of the world’s millionaires from the last two centuries grew their wealth from real estate investment.
Are you ready to start using your money for sound investments? Read on to learn how good real estate can become the investment you need.
1. Key Reasons to Invest in Good Real Estate
Predictable Cash Flow
“Cash flow” or “net income” the amount of money you’ll receive after all necessary expenses like maintenance and mortgage. Depending on the type of real estate investment you choose, you could receive a steady extra income year-round. For instance, a good residential property can give you an extra $1000 a month after necessary expenses for as long as you rent the property.
There are various tax breaks you can receive by owning a property or multiple properties. You may qualify for deductions on the property’s overall management or operating costs. Similar to cars, properties can depreciate. This means that costs are deducted based on how much useful life the property has.
Scalable Return on Investment
Once you become more familiar with the responsibilities of owning and managing a property, you can learn how to scale or increase that income. Because real estate is a tangible asset, you can improve its physical features to increase the value. This explains why house renovations increase the overall value of a property. If you make quality structural or cosmetic changes, you improve the property overall features.
Naturally Increasing Value (Appreciation)
Even without making renovations, real estate value generally appreciates over time. Appreciation is the rise in value due to increased useful life. Since there is a limited supply of land, property naturally becomes more of a demand which increases its value.
Get Started Without Large Down Payments
You don’t have to spend thousands of dollars to invest in real estate. Methods like REITs and crowdfunding platforms give you a lot of creativity and flexibility with investing. You can invest in stocks with smaller down payments and receive returns when stocks increase.
Before you understand the reasons why you should invest in real estate, it helps to know exactly what your options are.
2. Want to Purchase Your Own Land? Become a Landlord
You can either invest in commercial and residential properties as an individual or join a collective that manages properties for profit. These are called real estate investment groups or REIGs, which allow you to own property without the hassle of managing it.
Residential Investment: Become a landlord and collect rent by individually purchasing condos, houses, and other housing units.
Banks typically require a 20 percent down payment for the investment, but one advantage to residential investments is the ability to live in the unit while you rent it.
Commercial Investment: Become a landlord and collect rent by individually buying office space, hotels, strip malls.
3. You Can Invest Without Buying Whole Property
Yes, investing without buying real estate is entirely possible. With these methods, you’ll own shares or stocks of property instead of owning the entire property. Here are a couple of ways to do it.
Crowdfunding: Investing in real estate through a collective group of investors for a specific project.
With crowdfunding, you’ll invest your money in a pool along with other investors and the return is then divided among the group.
Platforms like Fundrise, RealtyMogul, and Crowdstreet enable individuals to invest without lower upfront costs.
REITs (Real Estate Investment Trusts): Investing in companies that own commercial real estate stock.
REITs are trusts that allow you to invest in real estate such as office buildings, hotels, and malls. You can make decent earnings from these platforms since they’re required to return 90% of their taxable income to investors (shareholders).
Purchasing Stocks vs. Finding Good Real Estate
Stocks can be riskier than physical investments since their values sway and change due to a variety of economic factors outside of your control as an investor. However, they offer more flexibility and affordability than physical real estate.
Buying physical property can be a more tangible investment than stocks. The process of purchasing and maintaining a property is relatively straightforward and offers you more control as the investor.
Want to start investing yourself? Contact us and we’ll help you manage your real estate needs so you can get started.