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How to Invest in Real Estate

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As mentioned earlier, there are multiple approaches to investing in real estate. An investor can leverage real estate that they own by renting out the space. This could mean investing in residential rental properties like multifamily homes and apartment complexes or it could be more micro like renting out a room in your house or a small income property/separate apartment. Rental properties are a great investment method because the rental revenue could not only help cover the ownership expenses of the property (which means the asset is paying for itself), but it also could bring in additional passive income for the owner to use to their liking; Either to reinvest, save, or spend.

Another method is fixer-uppers. In this method, an investor would buy an underpriced property that is in need of some TLC, renovate the property, and resell it for a profit. This is a bit more difficult because there is more risk associated with flipping. There are multiple factors that go into a successful flip. These factors include estimating the cost of renovation based on the condition of the house, the actual cost of renovation and how long the renovation will take. The investor must find the right intersection of these factors to realize the greater return. That may be a bit more arduous of a task than renting out a multifamily home per se.

A real estate investment trust, or REIT, is another method of investing in real estate. This method is unique to the other two methods because from the investor’s perspective this investment doesn’t involve any actual real estate. Similar to a mutual fund, buying a REIT is like investing into a company or machine that owns, operates, and realizes returns from the real estate, and then passes those earning on to its investors through dividends. REITs usually own and operate commercial real estate like office buildings, retail spaces and apartment buildings where they take the capital that individuals have invested and use it to acquire the real estate and leverage for a profit.

 

For more information contact an agent at Casandra Properties at 718.816.7799 or email info@CasandraProperties.com

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