Investing in Real Estate - 4 Investment Options
The investment in real estate is rewarding and profitable, if done correctly. It can help you diversify your portfolio of investments as well as generate extra income. The majority of real estate investments do not require you to deal direct with the tenants shops for sale in Islamabad. You can also purchase the property at an amount of the total price and then clearing the balance and interest over time. Here are four real estate investing options.
Rental Properties
Investing in residential rental properties is great for those who have renovation or DIY skills, and have the capacity to manage tenants.
Pros
* Gives regular income* Property can appreciate
* You can maximize capital using leverage
* Many of the expenses are tax-deductible
Cons
* Managing tenants can be a hassle
* Vacancies can reduce income
Tenants may damage property
House Flipping
There are many properties for sale at an affordable price that require an upgrade, remodel them inexpensively and then resell them at a profit. Flipping houses is not without risk. First, your estimate of repair costs must be exact it's not a simple thing to do. The longer the house is in your possession, the less money you'll make because you'll be paying an amount of mortgage, but not earning income.
Pros
* Secure your capital only in the short-term
* Potential quick returns
Cons
* A hot market could cool unexpectedly
* Requires deep industry knowledge
Real Estate Investment Trusts (REITs)
REITs are traded in major exchanges, just like stocks. REITs become a reality by using the funds of investors to purchase and manage properties that generate income. To keep the REIT status 90 percent of the taxable income of the trust/corporation must be paid in dividends. REITs allow you to invest in nonresidential buildings like office buildings and malls that, may not be able of buying directly.
Pros
They are highly liquid since they are able to be traded
* They are in essence dividend-paying shares.
* These holdings are usually long-term leases that generate cash.
Cons
* Doesn't provide the leverage normally found in traditional rental property investment
Online Platforms
These online platforms link investors to developers in need of funds for their real estate development projects whether through credit or equity.
Pros
* You have the option of investing in one project or an array of projects
* Geographic diversification
Cons
* Typically, illiquid and speculative
* Management charges
Conclusion
The four real estate investment options that investors have are houses for sale, rental properties REITS, online platforms. In the end, the most suitable real estate investment opportunities are ones that are in line with your investment objectives.
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