Apartment rentals REITs, REITs, digital real estate Land and crowdfunding platforms are all real estate investment.
The information for investing in this article is for informational purposes only. Our website doesn’t offer consultancy or brokerage services nor do we recommend or advise investors to invest in or sell specific security, stocks or digital real estate investments.
There are different kinds of real estate investments but the majority of them fall into two classes: Physical real investment in real estate, like land residential and commercial properties, as well as other forms of investment that don’t require owning physical property, such as REITs and crowdfunding platforms.
Investing in traditional, physical real estate may yield an attractive return, however it will require more money upfront , and can incur expensive ongoing costs. The crowdfunding and REIT platforms have less of a financial barrier to entry, meaning that you can invest in multiple types of real estate for far less than it would to purchase a single traditional property. Alternative real estate investments have the added benefit of not needing to leave the house or change into a suit before you can invest.
If you’re thinking of investing in real estate there are five types to look at:
The public market for publicly traded REITs, or real estate investment trusts are companies that manage commercial real property (think offices, hotels, along with malls). You can invest in shares of these businesses on an exchange. By investing in REITs you are investing in the real estate they own and are not subject to the risks that come with owning real property directly.
REITs are required by law to return at the minimum of 90% of their tax-deductible earnings to shareholders each year. Investors will be able to receive attractive dividends , in addition to diversifying their portfolios through real property. REITs that are traded publicly also provide greater liquidity than other estate investments: If you’re in a position to suddenly need some cash, it is possible to sell your shares to the exchange. If you want to buy REITs listed on the stock exchange it is possible to do this by opening a brokerage account.
2. Platforms for crowdfunding
Real estate crowdfunding platforms allow investors access to real estate investments that may yield high returns, but have a significant risk. Some crowdfunding platforms are open to only accredited investors that is, people with the net worth or joint net worth of an individual spouse, greater than $1 million without excluding the value of their residenceor a yearly income in each of the last two years that is greater than $200,000 ($300,000 with a spouse).
“Keep in mindthat the majority of crowdfunding platforms have a short track record and have yet to go through an economic downturn.”
Others, such as Fundrise as well as RealtyMogul which offer investors who do not meet those standards — also known as nonaccredited investors — access to investments they wouldn’t otherwise be permitted to invest in. They typically come in the form of nontraded REITs which are REITs that don’t trade on the stock exchange. Since they’re non-publicly traded and aren’t publicly traded, they can be very liquid, which means that your money will be invested for a minimum of several years and you might not have the option of pulling your cash out of the investment if you need it. Be aware that many crowdfunding platforms have a limited track record and have yet to weather the economic recession.
3. Residential real estate
Residential real estate is virtually anywhere that people live or stay, such as single-family condominiums, homes, and vacation houses. Real estate investors in residential real estate earn profit by collecting rent (or regular payments for rentals for short periods) from tenants, via the appreciation value their property is worth between the time they purchase the property and when they let it go, or either.
Investing in residential real estate is a possibility that can take many varieties. It can be as simple as renting out a spare space or as complicated as buying or flipping a house to make the purpose of making a profit.
4. Commercial real estate
Commercial real estate refers to space which is leased, rented, or otherwise used by a business. A commercial building that is rented by one business, a gas station, one-stop mall with many unique businesses and leased restaurants are just a few types of commercial property. Unless the business owns the property that is, each company would pay rent to the property’s owner.
Industrial and retail real estate could fall under the commercial umbrella. Industrial real estate typically includes properties where products are made or housed rather than sold, like warehouses and factories. Retail space is where a customer can buy a product or service like an online clothing shop. Commercial properties typically have longer leases and can command higher rents than residential properties. This could mean a higher and more stable annual income for the property owner. They may also require larger down payments and management costs.
5. Raw land
If you construct it, will people move in? Investors typically buy land for either commercial or residential development.
But buying land to develop will require a significant amount of market research, particularly in the event you want to develop the property yourself. This kind of investment is most recommended for people with an enormous amount of money to invest as well as an extensive knowledge of all things real estate , including building codes, zoning regulations, flood plains and knowledge of local residential and commercial rental market.
Which investment in real estate is best on Lubbock?
If you’re thinking of making a move into traditional real estate -such as commercial or residential properties — performing your due diligence does not simply mean making a your down payment. Knowing your local market is crucial. If there’s no demand for residential or commercial spaces in your neighborhood or property values begin dipping, that investment could quickly become becoming a burden.
If you’d prefer to stay more hands-off in your investments, REITs and crowdfunding platforms are a great way to add real estate your portfolio with no physical property.
Some brokerages offer REITs for sale on the open market as well as mutual funds.