How to Invest in Real Estate: 4 Great Ways to Get Started
One of the investment sectors that you can never go wrong is real estate. The sector has grown over time. This article will show you how to invest in real estate.
Thinking of real estate, the first thing in your mind is a home. Yet, there are other several options in real estate apart from home. It is good to know where to invest in real estate.
As per KNBS, the sector has contributed to about 3.3% of the countryâ€™s GDP in the past two decades. Although real estate is a lucrative business, it can be intimidating. This is because it is capital intensive and exists in a very dynamic market.
There are many ways one can invest in real estate. Here are some of the ways in which one can invest in this industry;
Â· Real Estate Investment Trusts (REITs)
If you are looking to invest in real estate with little money, REITs is the way to go. REITs use potential investors money to purchase and operate income properties.
This method works as a pool of capital from different investors. It generates a steady income stream but little in appreciation. For ease of understanding, public companies buy and lease out real estate assets. Example of these assets is shopping malls, office buildings, apartments etc.
REITs thus pay all their after tax profits to their investors as dividends.
REITs helps reduce the worry of owning real estate. The management handles all the activities and procedures involved. You relax and collect dividends. One can buy and sell REITs through brokerage account, like other public companies.
Beginners in real estate industry can invest in REITs as it requires less amounts of capital. It is the most liquid real estate investment available.
Â· Invest in Your Own Home
The most primary way to invest in real estate is to invest in your own home. You can do this by taking a mortgage, making monthly payments and owning the house after some time. Investing in your own home helps you create wealth in the long term.
Also, you can invest in house flipping. Either way you would have invested in your own home. House flipping is one of the best strategies that are suitable in real estate investment. House flipping is the process of buying, rehabbing and selling the property for a profit. It requires significant experience in real estate valuation, marketing and renovation.
Â· Invest in Real Estate Using Online Platform
Technology has contributed much to almost all industries. Real estate is not an exception. There are platforms that allows investors interact with real estate developers.
In Kenya platforms such as CapitaLand East Africa Ltd provides such an interaction. The developer lists their proposed project, the required funding and estimated returns. The investors can weigh from the website if it is a viable project or not. If viable, they invest.
This is a great way to start real estate investment especially if you have a great project with no funds.
Â· Consider Investing in Rental Properties
Rental properties attract individuals who have the patience to deal with tenants. This offers opportunities to real estate have regular incomes and properties can appreciate. Rental properties maximize capital through leverage.
Although investing in rental properties can be exciting, managing tenants can be tedious. The downsides of rental properties also involve a lot of cash up front. That is from down payment to maintenance.
The real estate investor has to determine whether the investment is worth or not. You will also need to screen tenants before letting them in.
Rental real estate investment is a great way to secure monthly income. Many investors may refer to this as having a passive income, it is always a great way to secure income stream.
You can also hire a property manager if you do not want to deal with tenants. Property management is an opportunity in real estate industry.
With so many decisions on how to invest in real estate, the best decisions are those that work best for you. As an investor, think about your time. Think about the capital you are willing to invest. Such factors help determine how you are going to invest in real estate.