What Type of Real Estate Investing Is Right for You?

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Nowadays, real estate investing has become increasingly popular. Thanks to technological advancements, it is easier to get started in real estate investing with the internet and social media.

However, there are many different types of real estate investing, and it can be challenging to decide which one is right for you, especially if you’re trying to build your 7 streams of income. Luckily for you, this article will provide an overview of the different types of real estate investing so that you can make up your mind.

  • REITs

Are you the type who likes to leave real estate investing to professionals? If so, you may consider investing in REITs or Real Estate Investment Trusts, especially in this era where many are fighting stress from daily encounters. It’s an ideal way to deal with your depression because all the heavy lifting is taken away from you.  REITs are a type of investment that allows you to invest in large-scale commercial real estate without going through the hassles of buying or managing any property yourself.

One of the pros of investing in REITs is that they offer a high degree of liquidity. This means you can easily sell your shares if you need to, without going through the hassle of selling actual property. Additionally, because REITs are traded on major stock exchanges, they offer investors transparency and accountability.

Another advantage of investing in REITs is that they tend to be relatively low-risk. This is because REITs must distribute at least 90% of their taxable income to shareholders as dividends. This means that even when the value of the underlying property decreases, you are still likely to receive a steady income from your investment.

The downside of investing in REITs is that they can be expensive, and they may not offer the same potential for appreciation as other types of real estate investing. Additionally, because REITs are publicly traded, they may be subject to more volatility than other types of real estate investments.

  • Rental Property Investing

The debate about rental property vs REITs is a long and complicated one. Some people swear by rental property investing, while others find it too much work for the insufficient return.

If you’re the type that likes being a landlord, then rental property investing may be right for you. Rental properties can offer a great deal of flexibility regarding your investment strategy. For example, you can choose to rent the property on your own or use a professional management company to do it for you. Additionally, you can choose to either live in the property yourself or rent it out to tenants.

Additionally, rental properties can offer a great deal of potential for appreciation. If you purchase a property in an up-and-coming neighborhood, you may be able to sell it at a better price than you paid for it down the line.

However, rental property investing is not without its risks. One of the notable risks is that you may have difficulty finding tenants willing to pay enough rent to take care of your mortgage and other expenses associated with owning a rental property. Additionally, if you do not properly screen your tenants, you may end up dealing with damage to your property or late rent payments.

  • Fix-and-Flip Investing

Do you find fun in working with your hands and being creative? If so, you may want to consider fix-and-flip investing. Fix-and-flip investing involves purchasing a property, fixing it up, and selling it for a profit.

The great part you will enjoy about fix-and-flip investing is that you get to be creative. You get to decide what type of repairs or renovations to make and how much you want to spend on them. Additionally, you get to choose the property type you want to purchase and in what neighborhood.

What makes the deal even better is that you can make a significant profit if you do it right. If you purchase a property for $100,000 and spend $20,000 fixing it up, you may be able to sell it for $150,000 or more.

However, fix-and-flip investing is not without its risks. You may overspend on repairs or renovations and lose money on the deal. Additionally, the housing market is constantly changing, so there’s no guarantee that your flip will be profitable. Finally, because fix-and-flips require a lot of work, they may not be suitable for everyone.

  • Wholesaling

Ever thought of the idea of becoming a real estate agent? If so, wholesaling may be right for you. Wholesaling involves finding properties below market value and then selling them to other investors for a profit.

While wholesaling requires some real estate market knowledge, it is a relatively simple business to get into. Additionally, because you are not purchasing the property or doing any repairs, wholesaling requires very little capital.

However, there are some downsides to wholesaling. One of the biggest is that you will need to find buyers for your properties, which can be messy without a good network of other investors. Additionally, because you are not the property owner, you will not be able to control what happens to it, which means there’s always a risk that the deal could fall through. Finally, wholesaling can be a very competitive business, so you will need to be prepared to hustle to be successful. 

  • Buy-And-Hold Investing

Do you have the money to purchase a property outright but don’t necessarily want the hassle of being a landlord? If so, buy-and-hold investing may be right for you.

This investment involves purchasing a property and then holding onto it for an extended period, usually at least five years. The great thing about buy-and-hold investing is that it is relatively passive; once you purchase the property, you can wait for it to appreciate. Additionally, you don’t have to worry about finding potential buyers or dealing with repairs because you are not actively trying to sell the property.

However, there are some risks associated with buy-and-hold investing. One of the biggest is that you may not be able to find a tenant willing to pay rent that’s enough to cover your mortgage payments and other expenses associated with owning a rental property. Also, the housing market is constantly changing, so there’s no guarantee that your property will appreciate over time.  

What Type Of Real Estate Investing Is Right For You

What Type of Real Estate Investing Is Right for You?
What Type of Real Estate Investing Is Right for You?

 

It depends on your goals, skillset, and risk tolerance. If you’re looking for a creative outlet, fix-and-flip investing may be right for you. If you want to get into the real estate business with minimal capital, wholesaling may be the way to go. And if you’re looking for a way to increase your income or a passive investment with the potential for appreciation, buy-and-hold investing may be the best option. Ultimately, it’s up to you to establish which type of real estate investing is right for you.

Conclusion

There you have it! Those are the most common types of real estate investing. Now that you know more about each, it’s time to research and decide which is right for you. Remember, on this list, there is no right or wrong answer regarding real estate investing. The best way to determine what type of investing is right for you is to educate yourself on all the different options and then decide based on your goals, skillset, and risk tolerance.

Happy investing!

 

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