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Real Estate Investment Options

Are you a Real Estate Investor? Then you have arrived on the best website for all your real estate investment news. Investing in real estate has increased in popularity. Since Airbnb started more than 10 years ago, all over the world the holiday home business has skyrocketed. But not only are second homes popular, but more people are also migrating to cities nowadays which has led to an overload of asking for property in cities all around the world. Today we dive deeper into five Real Estate Investment Options alternatives for the ordinary retail investor.

What are the most popular Real Estate Investment Options in 2021?

Investing in real estate is very popular globally. But what are the three most common and popular real estate investment options in 2021? We have done a thorough research and listed the top 3 for you.

The Traditional Real Estate Investment Option

You may start small by renting out a room to business or residential renters if you don’t want to be saddled with a large upfront investment expense. It’s a better idea to rent out a whole floor of your existing home if it’s sitting empty. You will, however, have to cope with the increased traffic. If you’ve leased a part of your home to a company, the circumstances may not be suitable for living in the same location because of their product or service. Your rental agreement must include all of your terms and conditions.

The most straightforward method to invest in real estate is to purchase or lease an asset for the long term, then rent it out to tenants, either residential or commercial. This has been done for decades and is still today one of the most profitable investments. The procedure is straightforward, but it necessitates a significant initial investment and ongoing maintenance and upkeep expenses. In old cities, in for example Europe, you can experience higher maintenance costs for the foundation or common areas such as stairways. Usually, there are monthly fees associations of owners. Make sure the item is clear of legal issues before leasing, buying it outright, or taking out a loan to purchase it.

Business Property

Real Estate Investment options for businesses. If it’s a business property, you’ll need to have the required registrations done with two witnesses at the sub-office registrar and follow the processes there. You may send out ads or spread the news about the property’s vacancy on the market after it has been registered. The renter must agree to the lease terms and sign it, after which the monthly rents will be your passive income from the property. 

Having tenants with overlapping lease terms in the same asset is a smart idea since the property will never be entirely empty. It also aids in timely maintenance expenses. You may also hire a property management company to take care of everything for you, but you’ll have to pay them commission fees at the same time. If the property is a residential one, just a trip to the sub-office registrar is required. Every renter will need similar rental agreements, and your investment returns will be calculated based on the monthly rents you get.

Fix-and-Flip

People with expertise in general contracting are increasingly interested in this kind of investment. You may invest in a commercial or residential property that requires a lot of care. Fix it up for good, then sell the asset to asset/property management companies for a much higher price if you have the money. An example of a house where this was done is a Dutch couple “the Oerlemans” who are living in California. The Oerlemans bought their home in Bel Air for $21.44 in Bel Air Los Angeles. After high renovations, they finally sold their house to The Weekend (singer) for $70 million in 2021. This explains what to fix and flip entails.

Being property and fixing it to sell for much more. Or to buy property in a specific location and calculating the price will go up. Fix-and-Flip means heaving an asset that is only owned for a limited period of time, but if one has done their research on the market beforehand, this kind of investment may provide excellent results.

This method has fewer constraints in terms of regular maintenance, registration work, and the like when compared to owning a property for the rest of your life. However, you must be acquainted with the market’s demand and supply of real estate, as well as the cost of the remodeling work you want to do. It helps to have an experienced partner in this.

ETFs, Mutual Funds, and REITs

Although they are not identical, they may be lumped together in the same category. You may buy exchange-traded funds (ETFs) and mutual funds that are invested in real estate. ETFs that invest in real estate equities, such as publicly listed housebuilders, may be purchased. ETFs that invest in REITs (Real Estate Investment Trusts) are also available. Mutual funds are actively managed, whereas ETFs are managed passively by a fund manager.

ETFs and mutual funds provide a lot of liquidity and cheap fees, but there are no monthly dividends and you may not get any money until you sell the appreciated shares. The main benefit of ETFs and mutual funds is their cheap investment cost.

REITs, on the other hand, enable investors to participate in a variety of real estate assets via a single investment vehicle. Consider it a mutual fund comprised solely of real estate assets or real estate-backed debts. Multiple investors can pool their resources into a REIT, and the dividends earned are distributed to the investors based on their percentage of the fund’s investment.

While REITs have a lower investment ticket size than equity-oriented products, they seldom offer returns that are comparable to or greater than equity-oriented products. Furthermore, the investor has no say in how the investment is distributed among all of the REIT’s properties.

All of these choices deal with real estate, so they will be reasonably stable; nevertheless, the anticipated profits may not meet many people’s long-term investing goals.

What Option is best for you?

Real estate may be a profitable investment, but you must first figure out what works best for you. You may make a choice based on how much you’re willing to invest, the kind of liquidity you want, the consistency of your cash flow, and your risk tolerance.

Investing in, leasing and flipping homes require significant sums of money and expertise, not to mention a thorough knowledge of the local real estate market. Additional duties include finding renters, maintaining assets, and searching for purchasers.

Mutual funds and exchange-traded funds (ETFs) are ideal for individuals who want to invest gradually rather than in a single amount. However, there is no consistent cash flow, and liquidity is determined by the share value at the time of redemption.

REITs typically pay out quarterly dividends, but some may be able to pay out monthly payments as well. They’re also not particularly expensive in terms of the minimum investment ticket size. However, since the REIT’s asset mix cannot be altered, any asset loss must be borne by the investors throughout the course of their investment. There is no way to invest solely in assets that are lucrative.

Fractional ownerships are becoming more popular since they allow investors to choose a lucrative asset and sell their own if their expectations aren’t fulfilled.

Whatever you pick, keep in mind that real estate is most advantageous when you invest for the long term. To enjoy the advantages of real estate investment, you should stay with an asset for at least one to two years, excluding the fix-and-flip option.

Our Real Estate Invest agents are here to advice and assist you!

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