How should I make an investment in real estate projects?

Real estate is always a better investment option compared to bonds, stocks, and equities, given the buyer can opt to pay partially by taking out a loan and the rest in EMIs. There are many ways to invest in real estate.

Rental Properties

Owning a rental property has always been the preferred way to invest in real estate. Investing in a rental property requires knowledge of mortgage loans, leasing, property management, and tenant and landlord relationships. It is also very important to know the value of the property, the rate of appreciation of the property, and what kind of tenants to lease the property out to.

There are quite a few pros and cons to investing in rental properties. Almost everyone dreams of earning money by doing nothing. Investing in a rental property comes very close to that dream. It is essentially a passive source of income, and a lot of people make it a part of their retirement plan. Another advantage is that property tends to appreciate over time. The value of a property may increase by five times within the span of a decade. It gives the investor an option to sell off a property when the time is right. Rental properties also have tax benefits. An income from a rental property would be taxed differently than that from employment.

Landlords can also charge rent depending on the kind of tenants they get and the requirements of the tenants. Working professionals living alone or with their friends often find it harder to get accommodations as compared to families. Landlords could negotiate the rent with these categories of prospective tenants more than others as most of them are willing to pay more.

Also, landlords could just choose to rent out a part of the property. This is a great option for someone going through a financially lean phase who has extra space in their house. However, being a landlord may have its fair share of pitfalls. Real estate is an asset that cannot always be quickly liquified. The procedure takes time and money. Also, the tenants may be far from ideal and may be frequently late on rent, demanding, destructive, or, in some cases, involved in illegal activities. The neighbourhood also plays a role in the value of the property, and the value may depreciate if the neighbourhood declines.

House Flipping

House flipping may not require a realtor’s licence, but it certainly requires expertise and knowledge of the real estate market and trends. Real estate flippers do not hold on to the properties for a long time. They try to resell within a few months. Flippers could either buy a fixer-upper, renovate it, and put it on the market, or just buy a house before an anticipated boom in the real estate market and sell it for a big profit when the market is at its peak.

Real Estate Investment Groups

Real Estate Investment Groups are for people who want to own rental property without the hassles of being a landlord. A company will buy or build a set of buildings, usually apartments, and then allow investors to buy them and join the company. The company takes care of handling maintenance, advertising, and interviewing tenants in exchange for a percentage of the monthly rent from the investor.

Real Estate Investment Trusts

Real Estate Investment Trusts purchase and operate income properties with funds provided by investors. The best part about a REIT is that it is highly liquid, and investors earn without actually having to buy or manage the property.

Online Real Estate Platforms

Online real estate platforms combine funds from several investors and invest on their behalf in properties that would otherwise be expensive to pursue. The medium works best for people who can afford to leave their assets unattended for a lengthy period of time.

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