For any new investor, learning how to invest and how to diversify is important. Not only does this help you manage risks, but also can help bolster your investments and returns. That is why more investors are looking to invest in real estate.
Real estate is one of the most popular investments. Some of the reasons for the popularity of real estate investment range from flexibility, returns, risk assessments, and the myriad of options available.
No matter your risk profile, there are plenty of ways to invest in real estate. With easy ways to invest, the opportunities are endless for your next investment. Here are 3 ways to invest in real estate and diversify your portfolio.
Note Investments
One of the easiest real estate investments is note investing. Note offers a unique way to invest in real estate with minimal costs, higher returns, and minimal maintenance. This may be a way to invest in real estate for your first investment.
What is note investing? When a property is purchased, buyers sign a promissory or mortgage note. Lenders or banks can sell these notes to increase their cash flow and equity. Note Investors can purchase these notes and receive the interest from these loans, and can purchase them at a discount from the lenders.
Note investing is an easy way to invest in real estate because of its simplicity. Instead of learning the latest interior design trends, or how to find tenants, you can easily profit off an interest for a discounted note almost immediately.
REIT
Diversify your portfolio with REITs! This unique real estate investment offers minimal risks, minimal capital, and promises steady returns. REITs are a great way to bolster your portfolio.
A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing properties. Real Estate Investment Trusts, or REITS are often large commercial investments (such as apartment buildings). Most REITs are publicly traded like stocks, which makes them highly liquid (unlike physical real estate investments).
REITs are an easy way to invest in real estate. With a smaller initial investment than some other investments. You will need to weigh the pros and cons against your risk profile and the individual investments.
Other Real Estate Investments
There are many ways to invest in real estate. Because of the flexibility of real estate investing, you can find an investment that matches your risk profile, and can help you diversify your portfolio. One thing to note with any investment is returns or profits are never guaranteed.
Here are some other real estate investments you can pursue:
- AirBnb: AirBnb is a simple way to begin your real estate investing journey. By simply renting a spare room you can profit! This can teach you some of the basics of how to attract and handle tenants, and is a simple way to determine if larger investments are for you.
- Rentals: Whether it is vacation or long-term rentals, this investment is ideal for those seeking monthly and passive income. Rentals can be a great opportunity in large cities or travel destinations.
- Flipping: One of the most popular and talked about real estate investments. You can flip a house, repair it and sell for a profit. If you know the right repairs to make, have the right market, and know what houses to buy, flipping homes can be expensive, but show some of the highest returns for real estate investments.
Real estate investing has never ending opportunities and investments to suit any investor. While some investments may require more capital than others to start, every investment comes with risk, and potential for returns. Before jumping into any real estate investment, it’s critical to do research and know your return.
Summary:
Real estate investing offers a wide landscape for endless possibilities. No matter your investment style you can easily find the right real estate opportunities for you.
Diversify your investment and invest in real estate in the following ways:
- Note Investments: Superannuation (or IRA) friendly, and offer passive income. These require higher investments up-front, but minimal risks depending on your note.
- REITs or Crowdfunded real estate investments: Less upfront cost than note investments, but slightly higher risks depending on the nature of your investment. Crowdfunding is more common in the USA, but may find it’s way to Australia.
- Other Real Estate Investments: Flips, Rentals and even Airbnb are great options for those looking for higher returns, but come at a cost of higher risks.
Will you try one of these real estate investments?
Catherine Way
About the Author: Catherine Way is the Marketing Manager at Prime Plus Mortgages: Mortgage Note Investing . She has created content for the following industries: Real Estate, Mortgage, Finance, Business, Real Estate Investing and many more.
The content of this article is independent to any opinions expressed by Financial Mappers.
Disclaimer: Financial Mappers does not have an Australian Services License, does not offer financial planning advice, and does not recommend financial products.
