According to Forbes, real estate is one of the most profitable industries in the United States. It is an investment option you might want to consider if you are looking for something profitable and long-lasting. Here are tips on how to invest in real estate for the first time.
Buy Shares in a Real Estate Trust
There are several real estate investment trusts out there that allow people to buy shares in a portfolio of properties. This option can complement the stocks and bond funds you have. You simply put your money in the trust and wait for it to grow. All real estate investment trusts are on major exchange markets, just like stocks. Most of them specialize in non-residential properties such as malls and office buildings.
Real Estate Trading
Real estate trading is a perfect alternative if you don’t have enough time to start your own company or wait for dividends from real estate investment trusts. It involves buying a property with the intention of holding it for certain duration of time. Most traders hold their properties for at least three months after which they sell them at a profit. This method is commonly used in dynamic markets or in places where properties are significantly undervalued. You should thoroughly analyze the the market before you buy a property to avoid losses.
Real Estate Investment Groups
There are companies that act like small mutual funds for those who want to invest in rental properties. A certain company buys residential apartments or commercial office buildings then allows other investors to buy the properties through them. The company collectively manages the properties on behalf of the buyers. This option is recommended if you want to own a rental property but don’t want the stress of being a landlord.
Rent Part of Your House
You can rent part of the house you don’t use. You can even buy a duplex house and live in one portion and rent the other. The good thing about renting part of your house is that you get to watch the tenant closely. It is less likely that he will fail to pay rent on time when both of you are in the same compound. It also gives you extra cash to pay your mortgage.
Direct ownership is the best way to invest in real estate. You are your own boss. You don’t answer to anyone, and you share the profits alone. However, starting as a direct owner in real estate is challenging. You have to handle all the legal requirements and be responsible for all the problems that might come up.
People who want to be direct owners often have to part ways with a lot of money to purchase a property. This can be challenging if you don’t have enough money to do so. Organizations like Wilson Gordon LLC give individuals with little capital a chance to establish and grow their real estate businesses through financing.