NEW YORK — Investors look for various opportunities they hope will help them grow their wealth. Some invest in the stock market directly by buying stocks and bonds, while others choose a more passive form of investing like index funds. Certain investors prefer to back enterprising entrepreneurs, and some people determine that real estate is the avenue to pursue.
There are several different ways to invest in real estate, including buying a home. Investing in real estate can be lucrative, although the return on such investments can be affected by high interest rates. When interest rates fall, investors often come out of the woodwork.
According to a 2022 Bankrate survey, 29% of Americans said that real estate was their prime pick for investing money they won’t need for at least 10 years. Investors considering real estate have many options to choose from.
Become a landlord
NerdWallet says buying a property with the intention of renting it out is one of the most common ways to invest in real estate. However, this could be one of the more labor-intensive real estate investment options, as it requires property owners to field calls from renters and always be available to tackle issues that inevitably arise. Plus, if renters are not properly vetted, landlords may end up with less-than-ideal tenants.
While there are management services that can offset some of the work, farming out tasks comes with expenses that can cut into profits. Still, when a successful renter-landlord dynamic is established, this option can provide significant long-term income.
Flip properties
Buying a property and “flipping it,” which means renovating and putting it up for sale shortly after, is another real estate investment venture. Flipping requires a lot of work and perhaps even some extraordinary skills.
First, it involves finding up-and-coming neighborhoods and then renovating within a reasonable budget so that you can sell the home at a premium. Remodeling costs can run high, and the time involved in flipping may be longer than investors anticipated.
Buy your own home
Building equity in a home creates a nest egg that homeowners can tap into at a later time, particularly when they choose to sell. Bankrate says banks treat owner-occupied properties more favorably, giving borrowers lower mortgage rates and requiring lower down payments.
Purchase REITS
Real estate investment trusts (REITs) enable investors to invest in real estate without actually touching physical real estate properties, advises NerdWallet. REITs are like the mutual funds of the real estate realm and include companies that own commercial real estate. REITs can pay out high dividends, making them popular retirement investments. Dividends can be reinvested to grow your money further.
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