Real estate investment is an expected part of building a more secure, diverse, and strong investment portfolio. Inventors storm the market in 2022, hoping bank interest rates will fall. You will be surprised to know that, as per a survey, it was found that real estate investments are one of the most preferred ways for Americans to build wealth.
When it comes to investing in real estate, be it commercial or private, there are many ways through which you can earn money and invest besides just being a simple landlord. For instance, you can take advantage of the real estate waterfall and equity models or buy the property outright if you have the cash.
You must remember that investing in real estate is a long-term game, and you must go about investing with that mindset and manage your expectations accordingly. If you want to invest money right now, but the bank rates are high, then you must wait for the right time, and meanwhile, you can save cash for the down payment.
Here are five ways you can begin investing in Real Estate.
1. Buy your own home
Renting is only sometimes the best option as, most times, the rent is equivalent to or close to the mortgage amount. So, you can make your residence your first investment, and it will also help you build equity.
If you look at the right market and time the market right, you can find the dream home with payments as affordable as your rent.
To let you in on an industry secret, banks always prefer to give loans at favorable rates to owner-occupied properties.
You might get away with a lower interest rate and down payment if you buy your own home and live in it.
2. Purchase a rental property
The next best way to invest in real estate is to become a landlord by investing money into a property and renting it. It helps you earn a steady income every month.
Compared to commercial properties, rental property is easier to manage, and you can gauge the market much more easily.
Compared to commercial properties, you will not have to invest hundreds of thousands of dollars; instead, you can own your home by putting down twenty thousand to forty thousand dollars.
3. Flip houses
Flipping houses is a popular way to build wealth and invest in real estate. Still, you must have relevant experience and expertise in determining which houses are worth flipping and investing in.
The basic model is that you find an undervalued property, renovate it and sell it for a higher price. The main challenge is finding the right property.
4. Buy a REIT
A REIT, known as Real Estate Investment Trust, is a viable option for passive returns. Buying a REIT is like owning a stock as you enjoy the liquidity without having to be involved like a landlord.
5. Waterfall model
This is not a method of buying a house, but it is more about how the profits must be distributed amongst the partners and other stakeholders of the property.
Under this real estate waterfall model, the profits are distributed unevenly per the predetermined ratios and provisions.
So, if you are planning to broaden your horizons and begin investing in real estate, these are some of the best ways to begin your journey.