Apartment rentals, REITs, virtual real estate land, crowdfunding platforms and are all examples of real estate investment.
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There are different kinds of real estate investment, however the majority of them fall in two categories: Physical estate investments like land, commercial and residential properties and other modes of investing that don’t require ownership of physical property, such as crowdfunding platforms and REITs.
A traditional investment in physical property can provide an attractive return, however it requires more cash upfront and it can have substantial ongoing costs. These crowdfunding platforms and REITs have low financial barriers to entry. That means you can invest in many different kinds of real estate at less than what it costs to buy a traditional property. Alternative real estate investments have the added benefit of not needing to leave the house or get dressed before you can invest.
If you’re considering investing in real estate Here are five kinds you should consider:
1. REITs
Publicly traded REITs, also known as publicly traded (also known as real estate investment trusts, are companies that have commercial real-estate (think hotels, offices as well as malls). You can purchase shares of these companies on an exchange. If you invest in REITs you are investing in the real estate these companies own without having to take on the risk associated with owning real property directly.
REITs are required to pay at the least 90% of their dividends that are tax deductible to shareholders each year. This means investors can receive lucrative dividends and also benefit from diversifying their portfolios using real estate. Publicly traded REITs also offer more liquidity than other property investments. If you suddenly require cash, you can sell your shares to the stock exchange. If you want to invest in REITs that are publicly traded, you can do so through a broker account.
2. Platforms for crowdfunding
Real estate crowdfunding platforms allow investors access to real estate investments that might provide high returns, but carry significant risk. Some crowdfunding platforms are available just to accredited investors which is defined as people who have an net worth, or joint net worth of the spouse, of more than $1 million excluding the value of their home -or an annual income during the past two years exceeding $200,000 ($300,000 with the addition of a spouse).
“Keep your eyes on the prize, as many crowdfunding platforms are relatively new with a short track record, and have yet to go through an economic downturn.”
There are others, too, like Fundrise as well as RealtyMogul are able to provide investors who do not meet these minimal requirements — also known as non-accredited investors access to investments they wouldn’t otherwise be qualified to invest in. These investments often come in the form of REITs that are not traded as well as REITs that aren’t able to have a stock market listing. As they’re not publicly traded REITs that are not traded may be highly liquid, meaning that the money you put into them will be invested for at least a few years and you won’t be able to get your cash out of the fund should you require it. Consider that many crowdfunding platforms have a short track record and have yet to weather an economic downturn.
3. Residential real estate
Residential real estate can be found virtually anywhere where people live or go, like single-family homes, condos and vacation homes. Real estate investors who invest in residential properties earn cash by taking rent (or regular payments for short-term rentals) from tenants in their properties, due to the appreciation their property accrues between when they purchase it, and when they sell itor sell it.
The investment in residential real estate can take a variety of shapes. It could be as easy as renting out a spare bedroom or as complex as purchasing and flipping a house for a profit.
4. Commercial real estate
Commercial real property is space that is leased or rented by a business. A building for office use leased by a single company such as a gasoline station, an open-air mall that has several different businesses, as well as leased restaurants are all types of commercial estate. Unless the business owns the property in which case each business has to pay rent to the owner of the property.
Industrial and retail real estate can fall under the commercial umbrella. Industrial real estate usually refers to the properties where products are made or housed instead of sold, such as factories and warehouses. Retail spaces are places where the customer can purchase a product or servicesuch as clothing stores. Commercial properties typically have longer leases and may command higher rents than residential properties, which may mean greater and steadier long-term income for a property owner. They may also require more down payments and higher property administration costs.
5. Raw land
If you construct it, would they be there? The majority of investors purchase land for either commercial or residential development.
However, buying land to develop requires a lot of market research, particularly in the event you want to develop the land yourself. This type of investment is most advised for someone with the capital to invest and an in-depth understanding of all aspects of real estate , including building codes, flooding plains, zoning laws and knowledge of local commercial and residential rental market.
Which investment in real estate is the best one on Georgetown?
If you’re considering purchasing traditional propertyfor example, commercial or residential properties, performing your due diligence does not only mean putting together a your down payment. Knowing your local market is vital. If there’s little demand for homes or commercial space in your local area or property prices begin sinking, that investment may quickly become a burden.
If you’d prefer to remain more in control of an investment, REITs and crowdfunding platforms are a great way to add real estate your portfolio without owning physical property.
Some brokerages also offer REITs with a public trading market and mutual funds.