Embarking on Real Estate Investment: A Comprehensive Guide
Real estate is an established wealth-creation strategy. It can also add diversification to your investment portfolio. But how do you invest in real estate, and is it right for you? The answer depends on your risk tolerance and your goals. But there are options at all levels of investing experience and time commitment.
One option is to buy a rental property or other residential real estate that you plan to rent out to tenants for 12-month periods or shorter, through services like Airbnb (ABNB -0.49%). This is among the most hands-on ways of investing in real estate, and it can be challenging to find quality properties at good prices. But the returns can be substantial if you choose wisely and manage your property well. Also read https://www.johnbuysyourhouse.com/
Another way to invest in real estate is through real estate investment trusts or REITs. These funds are securities you purchase through a brokerage account, similar to stocks. They offer diversification and potentially solid returns, but they generally have lower yields than direct investments in physical property. They’re also relatively illiquid, meaning you may have to wait a while to sell them.
A third option is to use online real estate platforms to invest in real estate projects. These platforms match developers with investors who want to fund their projects. You can find a platform that fits your needs by searching for projects in areas you’re interested in and checking out the details of each one. These types of investments are often less costly than direct purchases, but you still have to vet each opportunity carefully and know what you’re getting into.
The biggest drawback of investing in real estate is that it’s not a surefire way to make money. Property values can go up and down, and you might not be able to find a tenant or manage your property well enough to make money from it. And if you’re an owner-occupant, you’ll have to pay for maintenance and insurance even if you’re not making a profit.
If you’re interested in adding real estate to your portfolio, the best thing to do is talk with a financial adviser. A Ramsey Solutions SmartVestor Pro can help you understand the local housing market and the various real estate investing options available to you. This article provides general guidelines only; your personal situation is unique. Learn more by connecting with a SmartVestor Pro today.
This article has been updated. It originally published in January 2019.
Real estate is a proven wealth-creation strategy, but it’s not for everyone. Learn the pros and cons of different types of real estate investments, so you can decide whether it’s a good fit for your financial goals and lifestyle.
