When you invest in real estate, it does not necessarily mean buying a house and then waiting for reap its profits. It is a lot more than that. In fact, real estate has constantly been seen as one of the most stable forms of investments.
It must be noted that although buying real estate is profitable, it is not as simple as just buying and selling. It is actually a lot more complex if you compare it to investing in bonds or shares. Buying real estate requires a lot of homework and research. It would help if you have good foresight as some properties grow faster in value as compared to others.
This is perhaps the easiest form of returns you will enjoy from real estate investments. You basically buy a property and then rent it out. You will be responsible as the landlord to bear all the costs of taxes, maintenance and mortgage payments.
If you could charge enough rental to cover all the costs, then you earn the profit. Meanwhile, even if you have to top up a bit, you will still be earning something as the instalment has been covered by the rental paid by your tenant. Once the term of your loan is over, rental becomes an income for you.
Trading Real Estate
If you have very good financial sense, you could get involved in real estate trading. This is something meant for the experienced. You do not only buy and keep the property. Instead, you will likely be holding the property for a short period of time and then selling it off when you see an opportunity for profit.
The normal duration for this can be in months or within a year or two. This is sometimes called flipping properties and you need to have very good cash flow in order to earn a handsome sum. As such, the faster your turnaround time becomes, the better it will be.
A REIT is short for real estate investment trust. This is where a trust is established to use a pooled money from investors to pump into real estate. It could sometimes involve operating income from properties. Like shares in the stock market, REITS are traded in the exchanges.
When it involves operating income, the corporation will enjoy constant revenue which means it can then be further distributed to the shareholders. As such, this form of investment can be quite consistent and lucrative.