Why Should I Invest in Real Estate?
Land is a commodity that is always in demand. Many investors have made the leap to investing in real estate. Real estate is a great way to expand your portfolio and boost your income.
Types of Real Estate Investments
There are many different types of real estate investments. Some investments require hands-on work while others are as easy as trading stocks. Each real estate type presents its own risk and reward. The most common types of real estate investments are:
- Rentals: There are many options for owning rentals. Investors can purchase anything from a vacation rental to a multi-family unit such as a duplex. Each type of rental presents its own benefits and downfalls. Most hands-on rentals have a higher risk but the reward pays out in the long run with monthly cash flow.
- Real Estate Investment Trusts (REITs): The most passive investment to be made when considering investing in real estate. Like the stock market, REITs are usually companies that own real estate, Therefore they are invested in the company, not as much as the actual properties. The dividends are paid quarterly. The major disadvantage to REITs is any profit is taxable. There aren’t deductibles to soften the blow of taxes.
- Triple-Net Leased Properties: These properties would be office buildings, medical buildings, or other types of commercial buildings. The tenant is responsible for maintaining the building and keeping up the costs. Once rented, a triple-net leased property would pay according to the leasing contract. Triple-net leased properties should be chosen wisely to avoid substantial loss.
- Crowdfunding: If an investor doesn’t want all their assets in one property, crowdfunding would be the prime investment. Many contributors put small amounts into purchasing real estate. Crowdfunding is dependent on the crowdfund sponsor and the sponsor’s knowledge of the real estate market. This is the highest risk for investing in real estate. The dividends are paid quarterly like REITs. When the property sells, this is also split to the individuals of the crowdfund.
Is Real Estate Investing Right For Me?
Real estate can be a great investment for a variety of reasons. The most appealing factor about owning real estate is passive income. A professional real estate agent with extensive knowledge of the housing market will be a large asset to those considering real estate as an investment.
Investing in real estate is an ideal option for people who desire to increase their capital worth and earn a passive income. Adding real estate to investors’ portfolios can be very rewarding when done the correct way.
The Realty Group Team has experience in this area and agents who specialize in real estate investments. Contact us to help you!