Investing in real estate is more than just finding the right place to call home. Over the last few decades, investing in real estate has become quite popular and it is now a great investment vehicle. Although it has many opportunities for making huge gains, owning and buying real estate has become more complicated than investing in bonds and stocks. In this post, we will learn about buying a home and getting into the real estate as an investor.
Basic Rental Property
In this case, you will purchase a property and rent it out to tenants. As the owner or landlord, you are responsible for paying the taxes, mortgage, and maintenance costs. You need to charge adequate rent to cover the above costs. Moreover, you may charge more to get adequate profit. It is a good idea to be patient and only charge enough rent to cover your expenses until the entire mortgage has been paid. After this, a high percentage of rent will be your profit.
Real Estate Investment Group
Nowadays, many real estate investment groups act as mutual funds for rental properties. Thus, if you want to buy a rental property but you do not want to be a landlord, these types of investment groups are the best for you. In this case, a company will build several condos or apartments, then allow investors to purchase them through the company.
In this way, you join the group as an investor. It is possible to own several units, but the management company is tasked with collecting rent, advertising, interviewing tenants, and taking care of maintenance.
Real Estate Trading
You should note that real estate traders are quite different from buy-and-rent landlords. These investors purchase the properties with the aim of holding them for a given period and then selling them for profit. The technique is known as flipping properties. It is all about purchasing properties that are considerably undervalued.
Real Estate Investment Trust
As you know, real estate has been around for several centuries. A trust is created when a corporation uses investors’ money to buy and operate income properties. They are sold and bought on major exchanges just like other stock. The corporation must pay out 90% of its profits as dividends to keep its status as a trust. The good thing about this is that the trust does not pay corporate income tax.