Real estate investing can be a lucrative way to earn additional income and build wealth. There are many choices for investing in real estate. Not sure where to start? Consider these three beginner-friendly options.
Rental properties. This investment option involves purchasing a property, such as a duplex or apartment building, and renting the property to tenants. If you’re skilled at home repairs and have the desire to manage tenants, this investment may be right for you. A rental property can provide a steady source of income as long as it stays occupied. When you have vacancies, you may need to cover some expenses.
Real estate investment trusts. A real estate investment trust is a good option if you want to invest in real estate without managing properties. In a REIT, a company acquires money from investors and uses the funds to purchase properties. The trust then collects income from those properties and pays dividends to its shareholders. REITs are similar to dividend stocks, and they provide the opportunity for a long-term cash flow.
Online platforms. Also known as real estate crowdfunding, online platforms allow you to join others in real estate investments by purchasing small shares of a property or fund. It’s a good option for people who want to start investing in real estate but don’t have the capital to purchase properties on their own. Often, investors join together to purchase large residential or commercial real estate. It can allow you to diversify your investments, though it may not offer the same return as other options.
Each investment option offers substantial benefits, but they also come with challenges. Work with a financial adviser who can provide additional guidance on the best real estate investment for you.
Sources: Fortune.com, Investopedia.com
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