Real estate is an ever-changing investment asset that many people have leveraged to great success for generations. Investing in real estate is a near-surefire way to generate growing wealth over the long term. Of course, any investment strategy—involving real estate or not—requires careful planning and a tailored execution that promotes healthy growth. Smart investors often turn to the property market to generate this profit, and the results speak for themselves.
With these advanced topics in the real estate space, gaining a foothold and creating your own wealth through the property investment space can be easy and rewarding. Read on to discover how you can quickly make a splash in real estate that will last you a lifetime.
REITs offer great value and low downside for early-stage property investors.
The REIT marketplace—or real estate investment trust marketplace—is perhaps the least understood aspect of property investments. Many investors skip over this phase of the investment class and fail to capture the excellent returns that a REIT investment can generate. REITs trade in the stock market and provide higher-than-average dividends to real estate investors who hold REIT shares. A REIT operates similarly to the index fund or ETF model, finding specific properties in the U.S. or international markets and bringing them into the fund’s holdings. ETFs do the exact same thing with stock shares. Instead of owning equity in companies, REIT owners instead own a share of a collection of physical property.
The REIT vs real estate debate is a hotly contested one, but the bottom line is that REITs provide dividends, just like physical property investments, but eliminate the risk associated with owning a single property. Real estate investing comes with enhanced levels of risk, but the rewards in the form of dividend rental income from tenants and flip sales dwarf the typical return from the S&P 500 or other forms of stock market investments. The disadvantage of the REIT market is that ownership here won’t net the same level of appreciable interest as direct investment into an investment property, but the trade-off is a worthwhile one, especially for those who are new to the property market.
Traditional property investments remain the gold standard for real estate investors.
Off-market real estate deals, foreclosures, and other bargains on the property market offer investors in this space the best bang for their buck. Property has always been a hot commodity, and the routine, monthly income that these investments can produce with ease is a testament to the power of investing in the asset class. The property also appreciates in value by a marked figure for most owners. This means that holding investment property for a decade or longer will provide you with steady dividends and a healthy increase in the underlying value of the asset over the long term.
Owners often consider selling and refreshing holdings every few years once they’ve become established—just like a stock market portfolio requires rebalancing on a scheduled basis.
The property market is a fascinating one, and perhaps the most lucrative aspect of real property investment is the ability to leverage these assets for increased leverage and spending power in other investment spaces. Using a home as collateral to borrow for another property is a common activity in the real estate space, and it’s used to great effect even for those who don’t yet own a property outright. Mortgage loans are a staple of the industry, and while you may only own a 20-percent share of the asset upon closing, you can take advantage of 100 percent of the dividend profits right away, effectively minimizing or eliminating your monthly payments through the renting process.
The property market offers unique growth potential, so consider getting into this space with your portfolio today.