One of the most crucial things you can do as an investor is branch out. Rather than investing in a handful of equities and bonds, it’s suggested that you diversify by getting into real estate investing.
If you want to take that approach, here are three helpful moves for you.
1. Investing in a long-term rental
Even during economic downturns, there are certain non-negotiable expenditures that people will always pay. A roof over one’s head is one such expense. Buying an income property and renting it out for a long time makes sense because of this.
The benefit of a long-term rental is getting a regular stream of money to look forward to, while retaining an asset with the potential to appreciate over time. In fact, if you buy a long-term rental in the correct market and price it correctly, you could discover that your rental income is greater than or equal to your operating costs, allowing you to sell when you’re looking at a world of profit.
2. Investing in a short-term rental
When you acquire an income property, you have a choice: You can either rent it out on a long-term basis or bill it as a short-term rental.
Short-term rentals come with a number of dangers. For one thing, you won’t receive a constant stream of money. Furthermore, you could find yourself with renters who don’t treat your rental home with the care it requires.
Short-term rentals, on the other hand, have their advantages. At times, you might be able to profit off of seasonal demand by charging a premium nightly rate for your rental. That alone might allow you to expand your portfolio or make up for periods when that property is unoccupied.
3. Investing in REITs
By investing in real estate investment trusts (REITs), investors can profit from the increasing value of commercial real estate. REITS pay at least 90% of their taxable income as dividends to shareholders, which is an advantage over other types of investments.
Furthermore, real estate investment trusts have the potential to appreciate significantly over time. So if you wait long enough, you could make a nice profit when you’re ready to sell your REITs.
REITs provide a unique way to participate in real estate investing while still maintaining your freedom and personal finances. Whether you opt to operate a short-term rental or a long-term one, you could still face costly maintenance and repairs throughout the years. You might not realize it, but your property tax assessment could be higher next year than it is today. With real estate investment trusts, you don’t have to worry about this risk since you are not personally responsible for any of the assets.
Real estate investing is a fantastic method to build wealth. Make these changes, and you could be in an excellent financial position in the future.