Real estate investing can be a smart way to have your money work for you instead of the other way around. However, just like any other type of investing, there’s always a certain amount of risk involved. Fortunately, the real estate market has proven to be more stable than other investment markets.
If you’re new to the game, you might be a bit shy to jump in. Many new to real estate investing are at first afraid to pull the trigger, but once they have, they wish they had done so sooner. One of the best tools they use is real estate MLS technology. This, along with a nose for profit, can help when looking for what real estate to put your money into.
Real Estate Investing – Your Best Choices for This Year
There are several promising areas where you can invest your money in real estate this year. Depending on your market, location, and budget, real estate can provide a good ROI. Taking the plunge into investing in real estate can be both frightening and exhilarating, but once you’ve gotten your feet wet, the benefits will quickly make themselves known.
Residential Real Estate
Purchasing residential real estate is what usually first comes to mind when thinking of real estate investing. There are numerous property types you can purchase; everything from single-family homes to condos, to cabins in the woods.
Once purchased, you’ll have a few different options on how to get the most back from your investment. The most common is to use it as a rental property to provide you with a monthly income. Other options include flipping it or using it as a home-sharing residence, either as a B&B or listing it on popular platforms such as AirB&B.
Commercial Real Estate
Investing in commercial real estate can provide a higher potential for income than a residential property. Commercial properties usually have a lower rental or leasing turnover rate than other types of real estate, making it a good choice for investors looking to maximize profits.
Industrial-type commercial real estate such as coin-operated automated car-washing businesses is also a good choice. Investing in this type of real estate venture requires more work than simply receiving monthly lease or rent payments from tenants, but for those with an entrepreneurial spirit, it could be a good fit.
Real Estate Investment Trusts
Commonly referred to as REITs, real estate investment trusts are another good choice for getting into real estate investing. REITs are companies that own a variety of different commercial real estate types like hotels, shopping malls, and restaurants. You purchase shares of a particular REIT and receive quarterly dividends, must like owning stocks. This is a no-hassle way of getting into real estate investing.
Active vs Passive Investing – Which One is Right for You?
When investing in real estate, you should have a clear idea of exactly how much you want to be involved in the investment. Some investors prefer to relax and sit back and collect an income while more aggressive types may want to be more involved. This isn’t a choice anyone can make for you and it’ll depend on exactly what you’re comfortable with.
Active investing requires more of a hands-on approach. For example, flipping a residential property requires you to fix and update the property. You’ll either do the work yourself or hire contractors to do the work for you. Either way, you’ll have an active role in the process.
Passive investing is great for new real estate investors or those who prefer to put up the cash and then receive its profits. Examples of passive investing include purchasing a REIT fund or buying a rental property. While REIT funds don’t require anything from the purchaser, rental properties will require someone to maintain the property which is either you or a management company.
Best Real Estate Investments: Final Words
Investing in real estate can be a profitable venture. Historically and over the long term, real estate investing is generally a smart way to have your money work for you. No matter what your goals and budget are, there are plenty of options for investing in real estate. The one that is best for you depends on how much you want to be involved.