One of the most common responses when you ask people where you should invest your money is real estate, a low risk approach which has worked for a many people over the years. Investing in bricks and mortar is the preferred option by many because of the fact that the market isn’t anywhere near as sporadic as the stock exchange plus in return for your investment you have some tangible that you own, which cannot be taken from you. There are a number of ways in which you can make money from real estate investment and we asked industry expert exactly what they are.
Private Equity Groups
Private equity groups exist in many industries and since the early 90s they have also existed in the world of real estate. The thinking behind this was as a reaction to the low property prices and individuals began to pool together funds from families or from companies in order to purchase large numbers of properties. The returns on these private equity groups are slow and some investors will see nothing for at least the first 5 or 10 years. Beyond this eating period however investors can count on annual returns up to 8% of their initial investment each year. This is a great option for people who want to get into real estate but don’t have the necessary knowledge.
The art flipping properties is about buying a place as cheap as possible and then selling it quickly in order to make a small profit. The people who flip properties will do so multiple times per year and in many cases they will buy many properties at one time with the intention of flipping them. In the majority of cases these are properties which are in need of some TLC and the investors will buy a dilapidated property or one which is in need of renovation, they will get the property cheap, invest money in updating it and then sell it for a solid profit.
Arguably the most common form of investment in real estate is to buy a property with the view to rent it out over the long term. When investors do this they can guarantee cash flow coming in each month which is essentially like taking small amounts of capital out of the property on a monthly basis. Investors will also have the chance to sell the property should the market spike and this is a relatively risk free option. To own a property that you are renting out also gives you protection against negative equity as the housing market doesn’t always affect the rental market right away, with rent prices differing from property values.
If you do have money to invest then real estate is a smart move which can see you make some significant returns on your investment. Take your time and think about how you wish to invest, before actually parting with any of your money.