Understanding Real Estate Investments
Investing in real estate is a great way to diversify your portfolio with investments.
Rental property investing involves finding, acquiring, and managing residential dwellings — single-family homes, duplexes, townhouses, and condominiums — for a profit.
As an investor, you can be a member of the real estate investment group, from there you acquire ownership of one or more units of an apartment building that's owned by a large company that buys and manages large apartment complexes. Real estate investment groups commonly buy out a property and sell units to investors while taking on the responsibility of administration and maintenance.
This strategy is best for investors who want the benefits of owning rental units — including monthly income, tax benefits, and potential appreciation — without the responsibility of managing the property. The company takes care of all maintenance, advertising, tenant placement, rent collection, and management in exchange for a percentage of the rent.
House Flipping also a popular form of real estate investment, nonetheless it has been a hidden real estate investment strategy for decades. This is when an experienced real estate investor purchases a distressed or outdated property at a discount price and improves the property to sell it at a higher price a few months later.
This is not a strategy for real estate investing beginners, as it's very easy to lose money flipping houses. But it's a great way to make short-term profits if you're an experienced real estate investor with access to deals and a well-chosen team of tradespeople like contractors, plumbers, and electricians. And you need an investor-friendly agent.
Another method is Crowdfunding. There are companies that provide online platforms where real estate developers who need funding to finance projects can connect with individual investors looking for a return from real estate investing without getting their hands dirty. As part of the “crowd,” you can choose to participate in either debt or equity investments.
Real estate crowdfunding platforms are plentiful; there are many to choose from. And each has its own niche. Many require you to be an accredited investor to participate. But even if they don't require it, this is a strategy best suited for investors with enough real estate knowledge to do proper due diligence on platforms, sponsors, properties, markets, and opportunities.
Finally, it is always important to remember the critical rule when investing: Risk is fundamental to the investment process but remains a concept that is not particularly well understood by most regular investors. As an investor, you must do Due diligence before making any potential investment. Thoroughly check and confirm all facts and ensure the purchase will meet your expectation.