INVESTING IN REAL ESTATE
Investing in real estate is not limited to ownership as it could include rental, flipping, management and various other forms. With an explosion of population seen in today’s urban areas, real estate has increasingly become the popular and preferred choice for investors. Unlike other investments, real estate offers limited liquidity when compared to the likes of stock and bonds and it is also capital intensive to execute with a long break even point. This makes investing in real estate a bit complex and in order to succeed there are certain factors which you just cannot ignore. When investing in real estate, it is important that you know which investment strategy best suits you. There are different types of investment avenues some of which include: •
Rental properties
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Real estate investment groups
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Real estate trading
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Real estate investments trusts
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leveraging
The rental of properties has been around for a while, and it involves the owner or landlord giving the room or house out to a tenant who then pays a monthly amount to the landlord. Property rental is an ideal way to invest in properties, although real estate is a capital intensive venture the weight has been significantly reduced through mortgage with are supported by the banks. By mortgaging, the total cost of the property does not need to be paid at once, in some instances as low as 15% - 25% can be paid followed by monthly payments made. A wise landowner will rent out and allow the rent cover the mortgage and other maintenance cost. Real estate investments group serve as mutual funds for the real estate sector. Real estate developing companies build apartments either condominiums or other types of real estate and offer the public an opportunity to invest by purchasing an apartment or flat, thus buying into the company. The company takes charge of all other aspects such as maintenance, rental, advertisement and other management aspects. All you do as an investor is sit back and watch your money roll in. the investment group take a percentage of the rental due to you as payment for the services. Real estate can also be traded like stocks and bonds. While in the traditional sense real estate is a long time investment, real estate traders are short term. It works by purchasing a building, refurbishing and selling at a higher price for profit, this is also known as flipping. The advantage property flipping provides is that money is not tied down for long periods of time. But flipping also has its disadvantages, in the event the investor fails to sell within a short period of time, the mortgage will begin to accrue and will register as loss. Another way real estate can be traded is through real estate investment trust (REIT). This trust is created when a corporation purchases and operates property using investor’s money. REITS can be bought and sold on the stock exchange in major markets just like stocks. An advantage of investing in REITS is that the scope of investment is wider as investors can invest in non residential building such as malls, office space and other type of buildings.