Apartment rentals REITs land, crowdfunding platforms and are all real estate investment.
The information on investing that is provided on this site is intended for informational purposes only. The website we provide does not provide brokerage or advisory services nor do we recommend or advise investors to invest in or sell specific stocks, securities digital real estate and other investment options.
There are several types of real estate investments however the majority are classified into two classes: Physical real estate investments like land, commercial and residential properties and other types of investment that don’t require real estate, such as REITs and crowdfunding platforms.
Investments in traditional physical real estate can offer high returns, but it also requires more capital upfront and could have the potential for high costs over time. These crowdfunding platforms and REITs have less of a financial barrier to entry, which means you can invest in different types of real estate for far less than it would for investing in one traditional property. These alternative investments in real estate also offer the distinct advantage of not needing to leave your house or change into a suit to begin investing.
If you’re looking to invest in real estate there are five types to think about:
Publicly traded REITs also known as real property investment trusts are companies which manage commercial real estate (think offices, hotels or malls). You can purchase shares of these businesses on the stock exchange. When you invest in REITs, you’re investing in real estate that they manage, without as many of the risks associated with owning real property directly.
REITs are required to return at least 90% of their tax-deductible earnings to shareholders each year. Investors will be able to receive lucrative dividends and also benefit from diversifying their portfolios through real estate. Publicly traded REITs also have more liquidity than other property investments. If you’re in a position to suddenly need cash, you can sell your shares through the exchange. If you want to invest in REITs traded on the public market, you can do so through the use of a broker account.
2. Crowdfunding platforms
Real estate crowdfunding platforms can provide investors access to real estate investments that may bring high returns but also pose a risk. Some crowdfunding platforms are accessible exclusively to investors who are accredited, that is, people with a net worth, or the combined net worth of one of their spouses, of more than $1 million exempting the value of their homeor an annual salary for the last two years that is greater than $200,000 ($300,000 with one spouse).
“Keep your eyes on the prize, as many crowdfunding platforms have a limited history and have yet to experience the economic recession.”
However, others, such as Fundrise and RealtyMogul, offer investors who don’t meet the minimums — known as non-accredited investors access to investment opportunities they would not otherwise be permitted to invest in. They usually come in the form of nontraded REITs which are REITs that don’t offer trading on the exchanges. Since they’re not traded publicly REITs that aren’t traded are highly liquid, meaning that your funds are invested for at minimum a number of years and you won’t be able to get your funds from the fund should you require it. Keep in mind, many crowdfunding platforms have a limited track record, and have so far not been able to weather an economic downturn.
3. Residential real estate
Real estate for residential purposes is everywhere that people live and reside, including single-family houses, condos and vacation houses. Residential real estate investors make income by acquiring rent (or regular payments for rentals for short periods) from tenants who live in the property, by the appreciation value their property accrues between when they buy it and when they are able to sell it or both.
Investments in residential real estate can take a variety of kinds. It could be as easy as renting out a spare room or as complex as purchasing and flipping a home to make the purpose of making a profit.
4. Commercial real estate
Commercial real estate is a space which is leased or rented by a business. A commercial building that is rented by a single firm or gas station the strip mall which houses a number of distinctive businesses and leased restaurants are just a few types of commercial estate. Unless the business owns the property itself, each business would pay rent to the owner.
Retail and industrial real estate may fall under the commercial umbrella. Industrial real estate generally refers to buildings where goods are produced or housed, rather than sold. Examples include factories and warehouses. Retail spaces are places where the customer can purchase a item or service, like clothing stores. Commercial properties typically have longer leases , and they can charge more rent than residential properties, which could translate into a more steady and stable annual income for the property owner. However, they might also require more money for down payment and management expenses.
5. Raw land
If you construct it, will people come? Investors usually buy land for either residential or commercial development.
However, purchasing land for development requires some market research, especially if you plan to develop the land yourself. This type of investment is best suitable for someone who has the capital to invest and a deep understanding of all things in real estate: building codes flooding plains, zoning laws — in addition to an understanding of local residential and commercial rental market.
Which investment in real estate is most suitable on Denton?
If you’re thinking about investing in traditional real estate — like residential or commercial properties — taking your time and doing your research doesn’t simply mean making a the down payment. Knowing the market in your area is essential. If there isn’t much demand for residential or commercial spaces in your area, or property values start dipping, that investment could quickly turn into the burden.
If you’d rather have more control over the investments you make, then REITs as well as crowdfunding platforms can be a good way to include real estate in your portfolio without having physical property.
Some brokerages provide REITs publicly traded as well as REIT mutual funds.