One of the smartest and most exciting investments to make is in real estate. Unlike riskier forms of investing such as in stocks and bonds, real estate allows for every type of payout ranging from smaller investments up front with the ability to earn big over time to fast lump sums of cash on the investor’s schedule.
Real estate is a distinct asset class and is considered a key component of a diversified portfolio. It's also a great way for new investors to build wealth and grow their money in an industry that always has a market and recovers after economic downturn.
Investing in property is also the oldest form of investment, and many people see this investment as being safer than other more volatile investment methods. Traditional property investing and acquiring rental land offer greater stability than the stock market, and there's possibility for tremendous growth.
Whether you’re looking for a quick payout or chance to build wealth with passive income (I mean, who isn’t?), there’s probably an appealing and accessible real estate investment opportunity for you, and we'll cover the four most common and profitable ways to get started:
One of the oldest and surest ways to create generational wealth in the real estate market is through rental income properties.
The same factors that make acquiring your own house an excellent investment for your future are also selling points for real estate investors to put money into rental real estate.
Investments in rental properties add a coverage component to earnings. Generally, the costs associated with owning a rental property are offset and covered in excess in the amount a rental property owner receives for the monthly rent they collect. Monthly rent paid to the owner of the house will result in a positive revenue stream and allow for future investment opportunities to continue the growth.
Direct ownership of larger homes or apartment buildings provide tremendous growth, as well, if investors have the personal finance to invest in multi-family units. These types of larger rental properties of course come with bigger mortgage payments, but the monthly rent from multiple tenants in apartment buildings should provide the same umbrella of mortgage protection and then some, just like single-family rental properties.
Conversion to apartment housing can be an excellent investment for retired individuals and businesses. The major reason is often overlooked: office buildings are often found in great areas and are cheap to rent in comparison to homes.
Converting commercial office space or formerly-industrial spaces into residences allows you to make better use of your property by adding to their value, which is particularly true if you live in an area where there are not many places for people who are renting or buying a home but need them in order to work in nearby downtown areas during the week, but don't like restrictions from hotels.
Many areas, especially more industrial zones that are quickly converting to housing, offer zoning for mixed spaces. You've probably noticed when passing by a modern apartment building that they host restaurants and retail outlets in their buildings as tenants, which is prosperous for the property owners and the surrounding community. Many of these formerly-industrial zones offer special financing options and incentives like tax benefits and lower interest rates to encourage developers and investors to beautify the area and drive in new business.
There are various types of strictly commercial rental property in which an investor can create profit and build wealth, and some include office and storage spaces. This type of commercial rental investment follows the same overall pattern of profitability as the prior-mentioned housing option.
The buyer collects monthly rental income from tenants and pays the mortgage, taxes owed, and upkeep. Commercial property investments can often be complex and more expensive than buying real property for residential use.
It's also important to keep in mind than any rental property, especially commercial or multi-family residential units, may provide steady cash flow but also require heavy presence and involvement from a property management company, which carries property management fees. Be sure you understand the responsibilities and costs associated with rental properties before diving in head first, but definitely stay open to the possibilities that rental income provides.
Because of high demand and the steady monthly income associated with rental properties of all kinds, it's easy to understand why real estate investing in rental is popular.
Acquiring property is a lucrative investment strategy, even if the entire property isn't exactly picture-perfect to start. Flips are a more than suitable option that generate income, especially for savvy investors who know how to hunt for a good deal on their initial investment in a flip.
A house flip requires putting money into improving the physical property in addition to the money invested to obtain the property as an owner. Successful house flipping also comes with a requirement to reach financial freedom through them - a flip real estate investor must have the know how and book of capable vendors to complete often complex construction projects.
Flipping houses is what's referred to as the wild side of property investment, somewhat in the same manner we view day trading. That's why you more commonly see flip properties in group investment funds that have amassed the mutual funds, connections, and experience to flip multiple properties concurrently to turn a big profit - more on investment groups later, though.
Flipping property offers risks that can be an effective strategy in hot market value conditions. A flipping is essentially buying or selling property for money. Taking risks can be very profitable for potential investors, and it can be dangerous to flip a property with no guarantee that you will make enough to pay for your renovation costs and mortgage. Even when your home is selling for more than market value, house flippers need to understand the big investment required to turn a profit.
Obviously, the possibility for mass profits from house flipping is enormous. HGTV has built an entire network on it!
An alternative to flipping houses in need of repair is to quickly offload them to other investors and real estate developers for fast cash without the hassle of property taxes or making improvements.
This is not what is classified as traditional real estate investing, but it is an opportunity to acquire and build wealth from the real estate market. This is a route we often see unintentional investors make. People often inherit property or have need to vacate their homes with no interest in rehabbing it for a bigger profit.
If you find yourself in possession of a less-than-desirable home and want to make quick cash, these quick sales without mortgage stipulations offer potential for strong earnings. Just remember, any profits made from the sale of a home that isn't your homestead (in Texas) are subject to higher taxes - so calculate what you owe as after tax profits.
Real estate investment groups (REIGs) are perfect for anyone looking for a way to buy or sell an existing rental property. Investments in REIGs and REITs (real estate investment trusts) are desirable and accessible, as most allow smaller investments in their funds because they are able to amass funding from a larger group.
REIGs offer several possibilities for structuring ROI.
REITs and REIGs are primarily used by investors that want real estate exposure and opportunity to earn income from a truly passive investment. REITs operate off of real estate crowdfunding. Investors' money is used by the company (mutual fund or trust) for purchase, repair, and operation fees like a securing a property manager.
Housing costs and profits vary by investment opportunity, so be sure to explore your options to profit from real estate assets like your own home, commercial real estate, real estate crowdfunding, or an apartment building.
Cash DFW Group would love to discuss with you the possibilities to earn passive income with real estate investing in myriad way. Reach to one of our experienced advisors for cash offers on your home, opportunities to earn with real estate investments, and even rental property profits through Cash DFW Group.
