5 SIMPLE WAYS TO INVEST IN REAL ESTATE
Welcome to our BUDIPLUS page, where we dish out our daily Nuggets on real estate and help you run your real estate transactions fairly and transparently.
Today, let’s look at five simple ways to invest in real estate.
When looking for investment options, there are many choices for where to put your money. Stocks, bonds, exchange-traded funds, mutual funds, and real estate are all good investments no matter what level of experience you have; forex or cryptocurrency may be too volatile for beginning investors. Which option you choose will depend on how involved you want to be in your investment, how much money you have to start investing, and how much risk you are comfortable taking on.
Buying and owning real estate is an investment strategy that can be both satisfying and lucrative. Unlike stock and bond investors, prospective real estate owners can use leverage to buy a property by paying a portion of the total cost upfront, then paying off the balance, plus interest, over time.
What makes a good real estate investment? A good investment has a high chance of success, or return on investment. If your investment involves a high level of risk, that risk should be balanced out by a high possible reward. Even if you choose investments with a high probability of success, though, that isn’t a guarantee. You shouldn’t put money into real estate—or any other investment—if you cannot afford to lose that money.
Owning rental properties can be a great opportunity for individuals who have do-it-yourself (DIY) renovation skills and the patience to manage tenants. Properties can be local, or there may be good out-of-state opportunities. This investing strategy does require substantial capital to finance upfront maintenance costs and to cover periods when the property is empty or when tenants do not pay their rent.
- Provides regular income and properties can appreciate
- Maximizes capital through leverage
- Many tax-deductible associated expenses
- Managing tenants can be tedious
- Potentially damaging property from tenants
- Reduced income from potential vacancies