There exist various reasons why investing in the real estate sector has always been a popular undertaking. The real estate business has not only enabled many seasoned investors to earn billions but it has provided equal opportunities to novice investors as well. However, many investors still end up in ruins because they do not play their cards right, and have no idea about the dynamics of the real estate market.
As lucrative as it is, the real estate business is incredibly volatile because it is strongly linked with the economic situation of the country which can change every year. As a novice investor, you must always opt for safe investment products initially, and as you gain more experience, you can then opt for riskier options. We have discussed here four efficient ways to invest in real estate so that you do not end up putting money in non-yielding investment products.
- Rental properties:
Buying rental properties is the best real estate investment for novice investors because it is not only safe but also provides a great opportunity to generate passive income. However, becoming a landlord is not everyone’s cup of tea because it requires a lot of patience with the tenants and considerable financial capital to get it going.
Moreover, browsing for the right properties and tenants can be quite tedious because it may take a lot of time. One way to tackle this problem is signing triple net lease contracts with tenants like Dollar General real estate because these contracts are long term and also relieve you from most of the generic landlord’s responsibilities. For example, NNN contracts dictate tenants to take care of property taxes, insurance premiums, and costs associated with maintaining the house.
- Real estate investment groups (REIGs):
Real estate investment groups are a perfect option for those investors who wish to invest in the rental real estate, but they do not want to deal with the hassles associated with running a property. In REIGs, a company buys or builds a set of residential blocks with many units and then invite the investors to get their pick of the units and become part of the group.
The company operating the whole investment group is responsible for all the administrative tasks that include maintaining all the properties, managing tenants, and collecting rents. In exchange for providing these services, the company takes a fixed percentage of the monthly rent.
- House flipping:
House flipping is for those investors who have considerable experience in the real estate business because these type of investments have narrow margins which a novice investor cannot grasp. In house flipping, an investor buys a property and then renovates it such that the value of the property substantially increases. He then sells it a considerably higher price to earn a decent amount of profit. If you are a novice investor, you would not have an accurate idea about the valuation of a property and how can you use some basic renovation techniques to jack up the property’s price. Therefore, refrain from investing your money in house flipping until you have gained considerable experience and have a good grasp on the market dynamics.
- Online Real Estate Platforms:
Online real estate platforms act as a bridge between investors who are looking to put their money in big residential projects and real estate developers who are looking for such investors. These platforms are also called real estate crowdfunding, and it does not require much capital in contrast to the hefty finances needed to purchase a property via traditional methods.
