Apartment rentals REITs the land market and crowdfunding platforms are all forms of real estate investment.
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There are many kinds of real estate investments but the majority of them fall into two classes: Physical real estate investments like land commercial and residential properties, and other ways of investing which don’t require the possession of real estate, such as REITs and crowdfunding platforms.
The investment of traditional, physical property can provide high returns, but it also requires more capital upfront and it can have high ongoing costs. REITs and crowdfunding platforms offer less of a financial barrier to entry. This means that you are able to invest in various types of real estate at less than what it costs to purchase a single traditional property. These alternative real estate investments also have the added advantage of not having to leave the house or dress in a suit before you can invest.
If you’re looking to invest in real estate Here are five kinds you should consider:
1. REITs
Publicly traded REITs, also known as publicly traded, or real estate investment trusts are firms that own commercial real estate (think offices, hotels, or malls). You can buy REITs’ shares on a stock exchange. If you invest in REITs you are investing in the property these companies own without having to take on the risk associated with owning real estate directly.
REITs must return at the least 90% of their taxable income to shareholders every year. Investors can therefore receive attractive dividends , in addition to diversifying their portfolios through real estate. Reit that are publicly traded can also provide greater liquidity than other estate investments: If you’re suddenly in need of money, you could sell your shares via the stock exchange. If you want to invest in publicly traded REITs, you can do so through an broker account.
2. Crowdfunding platforms
Real estate crowdfunding platforms offer investors access to real estate investments that could yield high returns, but are prone to risk. Certain crowdfunding platforms are accessible to only accredited investors defined as individuals with a net worth, also known as a the combined net worth of one of their spouses, of more than $1 million — without excluding the worth of their houseor a yearly income over the past two years which exceeds $200,000 ($300,000 with the addition of a spouse).
“Keep in mind, many crowdfunding platforms have an insufficient track record, and have yet to weather an economic downturn.”
Some, like Fundrise as well as RealtyMogul and RealtyMogul, give investors who do not meet these requirements — referred to as”nonnaccredited investors” access to investments they wouldn’t otherwise be allowed to invest in. These investments often come in the form of non-traded REITs or REITs, which do not offer trading on the exchanges. Since they’re not traded publicly REITs that aren’t traded are extremely liquid, which means the funds you invest for at least several years however, you may not be able to take your funds from the investment in case you need it. Be aware that most crowdfunding platforms have a limited time-line, and have so far not been able to weather an economic downturn.
3. Residential real estate
Residential real estate is virtually everywhere people live or remain, including single-family homes, condos , and vacation homes. Residential real estate investors earn income by acquiring rent (or regular payments for short-term rentals) from tenants in their properties, by the value that their property is worth between the time they purchase it, and when they let it go, or either.
The investment in residential real estate may take many shapes. It can be as simple as renting out a spare bedroom or as complex as purchasing and flipping a house for gain.
4. Commercial real estate
Commercial real estate refers to space that is rented or leased by a business. A business building leased by one business and a petrol station, an open-air mall that has several unique businesses and leased restaurants are just a few cases of commercial estate. Unless the business owns the property, each business would pay rent to the property owner.
Industrial and retail real estate could fall under the umbrella of commercial. Industrial real estate typically refers to properties where products are created or stored rather than sold, like factories and warehouses. Retail spaces are where consumers can purchase a product or service like the clothes store. Commercial properties typically have long leases and command more rent than residential properties, which could result in higher and longer-lasting in the long run for the owner. However, they also may require larger down payments and administration costs.
5. Raw land
If you construct it, can they move in? Investors typically buy land for either residential or commercial development.
However, buying land to develop will require a significant amount of market research, especially in the event that you are planning to develop the land yourself. This type of investment is most suited to someone with the capital to invest and a comprehensive understanding of all things in real estate: building codes flood plains and zoning regulations and an understanding of the local commercial and residential rental market.
Which real estate investment is most suitable on Lubbock?
If you’re thinking about taking a risk with traditional real property -including commercial or residential properties — taking your time and doing your research doesn’t just mean having to make a your down payment. Knowing the market in your area is crucial. If there’s little demand for homes or commercial space in your region or property values begin decreasing, your investment could quickly become one of the biggest burdens.
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 to own physical property.
Some brokerages provide REITs that are publicly traded and mutual funds.