4 Ways to Invest in Real Estate
By Angela Sanders Thursday, October 03, 2013, 09:21 AM EDT
If you're looking for a good investment, real estate is often a great way to go. There are many ways to invest in different real estate properties or companies, each requiring a different amount of risk and research going in. Whatever way you choose, investing in real estate brings back great returns.
Appreciation of Market Value
For those looking to make a profit through investing in real estate, one of the most widely known ways to do so is through allowing market value to appreciate. It's fairly simple to get started with this kind of investment. You need to buy property, then hold it. As time goes on, you'll see the value of the property appreciate. Sometimes, this happens faster than the rise of the overall market. Some areas of the United States have recently seen home values appreciate a considerable amount.
Invest in Rental Properties
You'll gain cash flows and, eventually, mortgage payoff, if you invest in homes that you then use as rental properties. When you buy a rental property and then keep tenants there, you'll get cash flow through their rent payments. In general, this could get you better returns than even bank interest or stock appreciation.
The process sometimes starts out slow — you may only make the mortgage payments and nothing further from the rents on the property when you start. Still, you increase equity as time goes on. That way, eventually the money you get from rents will satisfy the mortgage balance completely. You'll own the property at that point. Check out http://www.outdoorsecurity.net/ to secure the financial investment of your rental property.
Buy Below Market Value
One way to get your property to use for rents — or any other property you'll use as a real estate investment — is to buy below the market value. There are always properties on the market below the true market value. Some property sellers, for different reasons, will always have a need to immediately get equity out of their property. As a result, they'll let go of the property at a price that's well below its market value.
When it comes to properties in foreclosure, lenders may take less than market value so they stay away from further expenses. And when you jump on the chance to buy a property like this, you'll enter an equity position that's your profit right away.
Real Estate Investment Trusts
Real estate investment trusts, or REITs, are what real estate portfolios primarily invest in. REITs are companies that work to develop and then manage real estate properties. There are various kinds of REITs. These include apartment, office, shopping center, factory-outlet, healthcare, mortgage, industrial, and hotel REITs. Sometimes, portfolios will also invest in operating companies. You set up this kind of fund and manage it so that it invests in stocks, bonds, and mortgage instruments within the arena of real estate.
Whether you let market value appreciate, invest in real estate investment trusts, invest in rental properties, or buy below market value — or come up with a plan combining these strategies — investing in real estate is a great way to bring back returns.