3 Ways To Invest in Real Estate

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Purchasing and owning real estate may be a rewarding and profitable financial option. Prospective real estate owners, unlike stock and bond investors, can utilise leverage to purchase a property by paying a percentage of the total cost ahead and then repaying the remainder, plus interest, over time.

Though a traditional mortgage often requires a 20% to 25% down payment, in some situations, a 5% down payment is all that is required to purchase an entire house. This capacity to own the asset immediately after the documents are signed empowers both real estate flippers and landlords, who can then take out second mortgages on their residences to make down payments on more properties. Here are five major ways for real estate investors to profit.

  1. Real Estate Investment Groups (REIGs)

Real estate investment groups (REIGs) are suitable for persons who wish to own rental property but don’t want to deal with the inconveniences of managing it. Investing in REIGs necessitates a cash cushion as well as access to finance.

REIGs are similar to small mutual funds in that they invest in rental properties. In a typical real estate investment group, a firm buys or constructs a series of apartment buildings or condos and then invites investors to buy them through the company, thereby joining the group.


  • Renting out your home is less hands-on than owning a home
  • It provides both income and appreciation.


  • Vacancy dangers
  • Fees similar to those charged by mutual funds
  • Easily duped by dishonest managers

2. Rental Properties

Individuals with do-it-yourself (DIY) renovation abilities and the patience to supervise renters may find that owning rental homes is a terrific possibility. This technique, however, necessitates significant resources to cover initial maintenance expenses and to fill unoccupied months.


  • Regular income is provided, and properties can rise in value
  • Leverage is used to maximise capital
  • There are numerous tax-deductible connected expenses


  • Managing tenants can be time-consuming
  • Tenants may cause property damage
  • Income loss as a result of prospective vacancies

3. Real Estate Investment Trusts (REITs)

A real estate investment trust (REIT) is ideal for investors seeking portfolio exposure to real estate without committing to a traditional real estate transaction.

A real estate investment trust (REIT) is formed when a business (or trust) uses money from investors to buy and operate income assets. REITs, like any other stock, are traded on the major markets.

To keep its REIT designation, a firm must pay out 90 percent of its taxable profits in dividends. REITs avoid corporate income tax by doing so, whereas a typical company would be taxed on its profits and then have to determine whether or not to distribute its after-tax profits as dividends.


  • Essentially, these are dividend-paying stocks
  • The majority of core properties are long-term, cash-producing leases


  • The usual rental real estate leverage does not apply

In Conclusion

Whether real estate investors use their properties to produce rental income or to wait for the perfect selling opportunity, it is possible to build out a powerful investment programme by investing only a tiny portion of a property’s entire value upfront. And, like with any investment, whether the overall market is up or down, there is profit and opportunity in real estate.


Scott Stevens

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