Investing in real estate is a smart way to build an investment portfolio while also bringing in steady cash flow. There are many ways to invest in real estate, some taking more time and energy than others. Depending on the level of commitment, there are many types of investments to choose from:
Renting out a multifamily property brings in multiple sources of income. With so many units in one place, if someone were to move out there are still other units to bring in money. This leaves less of a risk of a $0 income. Another benefit of investing in a multifamily property is the exit strategy when it comes time to sell. Investors of the choice of selling the home, converting the units into condos to sell them off individually for much more money or finding partners with capital to partially cash them out.
Another smart investment is a single-family home. Unlike a multifamily home, there is only one source of income, but it comes with much less maintenance. This makes it the best kind of investment for first-time investors. Investing in a single-family home is cheaper than most investments, easier to manage, and even easier to sell. When an investor chooses to sell a single-family home, it’s easy to find a buyer. Most of the time, the current tenants will be interested in buying the property. If not, a single-family home is always an easy sell in the real estate market.
Although choosing to flip a house takes a bit more time to see a profit than other investments, it can sometimes offer a much bigger payout. After restoring and upgrading the property, the only thing left to do is sell it. Renting out the property will take much more time and maintenance over what could be years. Flipping a house can take a year max, depending on the number of repairs, and an upgraded property is much easier to sell. Be sure to find the right kind of property to sell in order to get the most out of the profits.
There are ways of investing in real estate without searching for a property to rent out or flip. An investor should consider investing in REITs (Real Estate Investment Trust) for a very much hands-off investment. Through this type of investment, a company that owns, operates or finances income-producing properties will use an investor’s contribution and give the investor a share of the income. These properties will range from apartment complexes, offices, shopping centers, or even hotels. It’s the perfect way to invest in real estate without taking on too much of the risk.