Alternative Ways to Profit from Real Estate

June 29, 2017

The real estate market is growing at a steady rate, signaling a strong comeback after the 2008 crash. Investors are already entering the market and taking advantage of the wealth of opportunities. Thanks to the current property prices, there are plenty of chances to bank a high return on investment (ROI) in the property market.

Of course, buying a property and aiming for a capital gain over a longer period of time is not the only way to invest in real estate and turn a profit. That is why, in this article, we are going to take a closer look at the alternative ways to bank profits from the real estate market. Let’s get started, shall we?

Basic Rental Property

The most common way to profit from real estate and the current market state is by investing in rental property. Buy-to-let properties are still the highlight of the market, especially with younger generations now seeking affordable properties to rent.

This particular market is also lucrative due to the increasing demand for affordable housing, as well as commercial spaces. Whether you want to stick with the residential market or venture into the world of commercial real estate, there are a lot of opportunities to explore nonetheless.

There is one tip you can implement if you are investing in basic rental properties, and that is to keep the rent at an affordable rate. Try to set the rent so that it covers the mortgage for that particular property. You can add a small margin on top of that to enjoy monthly profits on the side.

Setting a margin too high will only scare potential tenants away. With a slightly lower rent – and lower profit – you won’t have to worry about costs and other risks you face when the property is empty.

REIT

Real Estate Investment Trust or REIT allows you to tap into the property market even when you have limited capital. REIT works the way crowdfunding or conventional mutual funds work. Instead of buying an entire property on your own, you join forces with other investors in buying a group of properties.

The best REIT investment if you are just getting started is a REIT that consists of income-generating properties. This type of REIT allows you to still earn monthly profits from the investment while also enjoying a healthy capital gain over a longer period of time.

Even when you’re already in the real estate market with a variety of investments, REIT is still a good investment option to consider. It offers diversification and additional streams of income that other types of real estate investments can’t really offer. On top of that, you bear lower risks due to the fact that there are multiple investors sharing the burden.


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