Apartment rentals REITs, REITs, raw lands land and crowdfunding platforms are all examples of real estate investment.
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There are different kinds of real estate investment, however, the majority fall into two categories: Physical estate investments such as land, commercial and residential properties, and various other investment options which do not require the ownership of physical property, like REITs and crowdfunding platforms.
Investments in traditional physical real estate may yield the highest return, but it will require more money upfront and it can have expensive ongoing costs. The crowdfunding and REIT platforms have a lower financial barrier for entry, which means that you can invest in many different kinds of real estate for lesser than it would for investing in one traditional property. Alternative real estate investments have the added benefit of not needing to leave your house or change into a suit to start investing.
If you’re considering investing in real estate Here are five kinds to consider:
The public market for publicly traded REITs also known as real estate investment trusts, refer to companies that have commercial real-estate (think offices, hotels, along with malls). You can invest in shares of these companies on a stock exchange. When you invest in REITs, you invest in the property these companies own and do not have the risks that come with owning real property directly.
REITs are required to return at the least 90% of their net income tax-deductible to shareholders each year. That means investors can earn attractive dividends while diversifying their portfolios by investing in real property. Publicly traded REITs also have greater liquidity than other property investments. In the event that you’re suddenly in need of some cash, it is possible to sell your shares on the exchange. If you’d like to invest in publicly traded REITs then you can do that via the use of a brokerage account.
2. Crowdfunding platforms
The real estate crowdfunding platforms provide investors access to property investments that could be lucrative, but are prone to risk. Some crowdfunding platforms are available to only accredited investors, that is, people with a net worth, or the joint net worth of spouse, that is greater than $1 million — not including the property valueor a yearly income within the last two years of more than $200,000 ($300,000 with the addition of a spouse).
“Keep in mindthat the majority of crowdfunding platforms are relatively new with a short time-line, and they have yet to experience an economic slump.”
However, others, such as Fundrise as well as RealtyMogul, offer investors who don’t meet those minimums — also known as”nonnaccredited investors,” access to investments they wouldn’t otherwise be allowed to invest in. These investments are typically in the form of non-traded REITs or REITs that do not operate on the Stock Exchange. Because they’re not traded on the stock exchange, nontraded REITs can be very inliquid, meaning that the funds you invest for a minimum of several years in the event that you don’t be able to get the money from the investment if you need it. Be aware that most crowdfunding platforms have a limited history and have yet to weather an economic downturn.
3. Residential real estate
Residential real estate can be found virtually anywhere that people live or remain, including single-family homes, condos , and vacation houses. Real estate investors who invest in residential properties earn profit by collecting rent (or regular payments for rentals for short periods) from tenants, due to the appreciation their property will gain between when they purchase it and the time they are able to sell it or both.
Affording residential real estate can take many varieties. It could be as easy as renting out a spare room or as difficult as buying and flipping houses to earn the purpose of making a profit.
4. Commercial real estate
Commercial real property is space that is either leased or hired by a company. An office building that is rented out by a single business such as a gasoline station, an open-air mall that has several distinct restaurants, and leased ones are all kinds of examples of commercial property. If the business does not own the property in which case each business has to pay rent to the property’s owner.
Retail and industrial real estate could fall under the commercial umbrella. Industrial real estate generally includes properties where products are manufactured or stored instead of sold, like factories and warehouses. Retail spaces are where buyers can purchase product or servicesuch as the clothes store. Commercial properties typically have long leases and command higher rents than residential properties. This could translate into a more steady and stable long-term earnings for the property owner. They may also require more down payments and higher property management costs.
5. Raw land
If you construct it, how will they get there? The majority of investors purchase land for either commercial or residential development.
However, buying land to develop will require a significant amount of market research, particularly in the event that you are planning to develop the land yourself. This type of investment is most at those who have an extensive amount of capital to invest and a deep knowledge of all things real estate –building codes, zoning regulations, flood plains as well as knowing the local commercial and residential rental market.
Which real estate investment is most suitable on The Colony?
If you’re thinking of making a move into traditional real estatefor example, commercial or residential properties, being thorough doesn’t simply mean making a your down payment. Knowing the market in your area is vital. If there’s no demand for commercial or residential spaces in your area or property values start dropping, the investment can quickly turn into a burden.
If you’d prefer to not be involved in managing your investment portfolio, REITs and crowdfunding platforms offer a way to include real estate in your portfolio without owning physical property.
Some brokerages offer REITs that are publicly traded and mutual funds.