You’ve probably heard the term real estate investing, but do you know what it means or - more importantly - how to even do it? The best part of real estate investing is that there’s many ways to get involved. From hands-on to more passive methods, take a look at some of the ways that you can invest in real estate today.
What do you picture when you hear real estate investing? If you instantly picture home improvement shows on HGTV (think Fixer Upper or Flip or Flop), then you probably know about house flipping. In case you need a refresher, house flipping involves purchasing property for a short period of time and then selling it for more than you paid for. Most times, the value of property increases simply through appreciation, but many house flippers renovate for an additional boost. Regardless, make sure to remember the fundamental rule of house flipping: buy low and sell high.
Another obvious way to invest in real estate is buying rental properties. This method of investing involves purchasing properties, which are then rented out to help you generate steady monthly income. Similar to house flipping, rental properties can also benefit from appreciation as well as other tax-deductible expenses. If you’re ready to become a landlord, rental properties might be the right strategy for you.
Real estate crowdfunding is a relatively new strategy. When most people hear crowdfunding, they think about entrepreneurs trying to raise capital on platforms like Kickstarter and Indiegogo. Real estate crowdfunding is similar, but instead of raising funds for business inventions, it’s for real estate projects. Depending on the project, you can choose to invest small or large amounts of cash. This new financing approach is becoming popular, so don’t be surprised if you keep hearing about it.
Finally, Real Estate Investment Trusts (REITs) are companies that own, manage or finance income-producing real estate. Similar to owning stock in a company, investing means you own a small part of the properties. Now, the question you want to know: how do you make money as an investor? REITs redistribute rent from properties in the form of dividends. If passive income is your goal, this could be your next investment.