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Understanding The Top Simple Ways For Investing In Real Estate

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Understanding The Top Simple Ways For Investing In Real Estate

Getting a suitable property from a commercial real estate platform can be daunting for some people. Buying and owning a real estate property is a great investment strategy that can be both lucrative and satisfying. Unlike bond investors and stock investors, prospective real estate property owners can use leverage to purchase a property by paying off the balance and interest over time. The traditional mortgage requires a down payment of about 20% to 25% and in some cases, a 5% down payment is what it takes to buy the entire real estate property. Being able to control the asset the moment you sign papers emboldens both landlords and real estate flippers, who can take out second mortgages on their properties in order to make a down payment on additional properties. Read on to find out how you can make money from the real estate business.

Rental properties

Investing in rental properties is a great way for people with renovation and DIY skills and people who have the patience of managing their tenants. However, this method requires substantial capital for up-front maintenance costs. You also need to cover up for vacant months. Rental properties provide regular income and your properties can appreciate in value. You can also maximize capital via leverage. However, it can be tedious managing your tenants and tenants can damage your property. Also, when you have vacancies, the revenue will reduce.

Real estate investment groups

These are ideal for investors who want to own commercial properties for sale and other types of real estate properties without running them. Investing in real estate investment groups requires a capital cushion. It also requires access to financing. Real estate investment groups are just like small mutual funds that make an investment in rental properties. In a real estate investment group, a company builds or buys a set of apartment condos or blocks and allows investors to buy them through the company hence joining the group. One investor can own one or more units of self-contained living space. However, the company operating the group collectively manages the units, advertising vacancies, handling maintenance and interviewing tenants. In exchange for doing these management tasks, the company will take a percentage of rent.

A standard investment group lease is in the name of the investor and all of the units pool a percentage of the rent to guard against vacancies that may happen occasionally. To this end, you will get some income even if you have an empty unit. As long as the vacancy rate for pooled units does not spike too high, you should have enough to cover costs.

House flipping

This is another way you can invest in real estate and it is for people with experience in real estate valuation, renovation and marketing. House flipping requires the ability to do repair, oversee and the capital to do as needed. If you are a house flipper and you buy a property from a commercial real estate platform, you don’t improve the property. The investment should have intrinsic value required to turn a profit without alterations or the property will be eliminated from contention.

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