Investing in real estate can be a great way to build wealth and diversify your portfolio. But it can be intimidating for those who are new to the game. With that in mind, here are five main ways to invest in real estate that are easy to get started with and can help you make a profit. The first option is to buy your own home.
You might not normally think of your first residence as an investment, but many people do. Owning a home can provide you with a steady stream of income through mortgage amortization and appreciation of the property value over time. The second option is to buy a rental property and become a landlord. This can be a great way to generate passive income, but it also comes with more responsibility than other real estate investments.
You'll need to manage the property, find tenants, and handle any repairs or maintenance that may be needed. The third option is to use an online real estate platform. These platforms allow you to invest in specific real estate development projects, rather than in large generic portfolios of properties. Many of these online platforms charge very low fees for investing through the platform, but recently the returns have been in double digits.
The fourth option is to invest in real estate investment trusts (REITs). REITs are publicly traded companies that own and manage real estate investments. You can buy and sell REIT shares on the market through a brokerage account, just like any other public company. This makes REITs the most liquid real estate investment available.
The fifth option is to invest in turnkey real estate companies. Turnkey real estate companies offer new or renovated properties for purchase, often in areas where mortgages are cheap. They assume responsibility for investors' funds and act as intermediaries between individual investors and the real estate company. No matter which option you choose, it's important to keep in mind that all investments come with some level of risk.
If you're not sure if hiring a real estate agent is worth it, consider what your information gaps are and how much this could cost you in the long run. In addition, if a recession begins in the housing market, you could wait a long time before taking advantage of your investment. Like all investment decisions, the best real estate investments are the ones that best serve you, the investor.