5 Simple ways to invest in real estate with their Ups and Downs

When looking for investment options, there are many choices for where to put your money. Ranging from Stocks, bonds, exchange-traded funds, mutual funds, but real estate has always being the best investments you do no matter what level of experience you have; forex or cryptocurrency may be too volatile for beginners investors. Which ever option you choose will depend on how involved and in control you want to be with your investment, how much money you have to start investing, and how much risk you are comfortable taking on. Buying and owning real estate is an investment strategy that can be both satisfying and lucrative. Unlike stock, Forex, Cryptocurrency and bond investors, prospective real estate owners can use leverage to buy a property by paying a portion of the total cost upfront, then paying off the balance, plus interest, over time.

What makes a good real estate investment? A good investment has a high chance of success, or return on your investment. If your investment involves a high level of risk, that risk should be balanced out by a high possible reward. Even if you choose investments with a high probability of success, All this are not guarantee except with real estate investment. You should rather put your money into real estate—than any other investment—except if you can afford to lose that money slowly or out rightly.

Though a traditional mortgage generally requires a 20% to 25% down payment, in some cases, a 5% down payment is all it takes to purchase an entire property if you are owing it through mortgage. This ability to control the asset the moment papers are signed emboldens both real estate flippers and landlords, who can, in turn, take out second mortgages on their homes in order to make down payments on additional properties. Here are five key ways investors can make money on real estate.

1. Rental Properties: Owning rental properties can be a great opportunity for individuals who have do-it-yourself (DIY) renovation skills and the patience to manage tenants. However, this strategy does require substantial capital to finance upfront maintenance costs and to cover vacant months. According to Naira metrics data, the sales prices of new homes (a rough indicator for real estate values) consistently increased in value from the 2020s to date, The long-term effects of the coronavirus pandemic on real estate values remain to be seen.

good side:

• Provides regular income and properties can appreciate
•   Maximizes capital through leverage
• Many tax-deductible associated expenses

Other side:

• Managing tenants can be tedious
• Potentially damage property from tenants
• Reduced income from potential vacancies

2. Real Estate Investment Groups (REIGs): Real estate investment groups (REIGs) are ideal for people who want to own rental real estate without the hassles of running it. Investing in REIGs requires a capital cushion and access to financing.

REIGs are like small mutual funds that invest in rental properties. This is a typical real estate investment group that allows you co-own real estate portfolio to earn a certain percentage dividend with a particular time frame usually bi annually or annually, the company buys or builds a set of apartment blocks or condos, then allows investors to purchase them through the company, thereby giving the group of investors access to earn from the investment and it is a win win investment as it allows investors and co owner to earn from the investment.

Another way the Real Estate Investment Groups works is A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all of the units, handling maintenance, advertising vacancies, and interviewing tenants. In exchange for conducting these management tasks, the company takes a percentage of the monthly rent.

A standard real estate investment group lease is in the investor’s name, and all of the units pool a portion of the rent to guard against occasional vacancies. To this end, you’ll receive some income even if your unit is empty. As long as the vacancy rate for the pooled units doesn’t spike too high, there should be enough to cover costs.

Good side:

• More hands-off than owning rentals
• Provides income and appreciation

Other side:

• Vacancy risks
• Fees similar to those associated with mutual funds
• Susceptible to unscrupulous managers

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3. House Flipping: House flipping is for people with significant experience in real estate valuation, marketing, and renovation or you employ the service of expert like Hanifar Dynamic Company Limited. House flipping requires capital and the ability to do, or oversee, repairs as needed. This is the proverbial “wild side” of real estate investing. Just as day trading is different from buy-and-hold investors, real estate flippers are distinct from buy-and-rent landlords because real estate flippers often look to profitably sell the undervalued properties they buy in less than six months to gain more return. Pure property flippers often don’t invest in improving properties but they invest in the once with the intrinsic value needed to turn a profit without any alterations, or they’ll eliminate the property from contention entirely by refacing to suit the profitability value needed on the investment.

Flippers who are unable to swiftly unload a property may find themselves in trouble because they typically don’t keep enough uncommitted cash on hand to pay the mortgage on a property over the long term. This can lead to continued, snowballing losses. There is another kind of flipper who makes money by buying reasonably priced properties and adding value by renovating them. This can be a longer-term investment, wherein investors can only afford to take on one or two properties at a time.

Good side:

• Ties up capital for a shorter time period
• Can offer quick returns
• the return is normally within a certain percentage according to duration

Other side:

• Requires a deeper market knowledge
• Hot markets cooling unexpectedly
• Its demand driven

4. Real Estate Investment Trusts (REITs): A real estate investment trust (REIT) is best for investors who want portfolio exposure to real estate without a traditional real estate transaction. A REIT is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges, like any other stock. A corporation must payout 90% of its taxable profits in the form of dividends in order to maintain its REIT status. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed on its profits and then have to decide whether or not to distribute its after-tax profits as dividends. Like regular dividend-paying stocks, REITs are a solid investment for stock market investors who desire regular income.

In comparison to the aforementioned types of real estate investment, REITs afford investors entry into nonresidential investments, such as malls or office buildings, that are generally not feasible for individual investors to purchase directly. More importantly, REITs are highly liquid because they are exchange-traded trusts. In other words, you would need an expert real estate firm and a title transfer to help you cash out your investment. In practice, REITs are a more formalized version of a real estate investment group.

Finally, when looking at REITs, investors should distinguish between equity REITs that own buildings and mortgage REITs that provide financing for real estate and dabble in mortgage-backed securities (MBS). Both offer exposure to real estate, but the nature of the exposure is different. An equity REIT is more traditional in that it represents ownership in real estate, whereas the mortgage REITs focus on the income from real estate mortgage financing.

Good side:

• Essentially dividend-paying investment
• Core holdings tend to be long-term
• cash-producing leases

Other side:

• Leverage associated with traditional rental real estate does not apply
• Ultimate carefulness is needed

5. Online Real Estate Platforms

Real estate investing platforms are for those who want to join others in investing in a bigger commercial or residential deal. The investment is made via online real estate platforms, which are also known as real estate crowdfunding or real estate cashback. This still requires investing capital, although less than what’s required to purchase properties outright. Online platforms connect investors who are looking to finance projects with real estate developers. In some cases, you can diversify your investments with not much money. for more details and options on tested and trusted real estate platforms for real estate cashback or crowd funding contact Hanifar Dynamic Company Limited on this link: https://wa.me/message/AVY4ZCWYATLLB1

Good side:

• Can invest in single projects or portfolio of projects
• Geographic diversification
• Aware of the estimated returns on investment annually

Other side:

• Tend to be illiquid with lockup periods
• Management fees