What Are The Best Types Of Real Estate Investments?
In the last few years, property investments have had excellent returns and it seems that this trend will somewhat continue into the future. While there is no single answer to the question – What is the best way to invest in real estate? – there are several ways, each with its own dynamics, capital requirements and risk levels.
Investing in a principal residence property
This is arguably the most popular and important method of investing in real estate. Investing in a home to live in allows you to pay off your mortgage and grow your wealth. You are not helping your landlord pay the mortgage. Once you decide to sell, the taxman allows you to keep all the profits you made from the sale.
Buying a rental property
Unquestionably another popular method that allows the owner to generate income and build wealth. The return potential is strong as it allows you to leverage in order to buy the property, earn income from the rent (which can fully or partially offset your mortgage) and increase your equity when the property value rises.
Buying, fixing and flipping
Buying a substandard property, renovating and selling it is a profitable way of investing in the real estate market. The property has to have significant potential to increase in value, once you renovate it. However there are a number of issues that may end up causing you to lose money instead. You need to have knowledge of renovation costing which can become very expensive if not worked out correctly. If your home has some serious structural defects, your costs can increase tremendously.
Investing in real estate stocks or REITs
Investing in Real Estate Investment Trusts is another profitable way of investing in the real estate market without much hassle. A REIT can own a large portfolio of properties that can include commercial and residential real estate, malls and even hospitals. Because many REITs trade on stock exchanges, you can buy them very easily with minimum capital. A REIT ETF is another investment instrument that provides you with a diversified portfolio of REITS. With REIT ETF’s you do not have to go through the process of choosing specific REITS.
Adding an Airbnb type component to an existing property
You can rent out a spare bedroom to earn some extra cash. You have to make sure that your accommodation meets the municipal bylaws, your property strata (if applicable) and the Airbnb/VRBO regulations.
Investing in commercial real estate
This is a more uncommon method of real estate investing for individual investors. While the income potential is significant from rental income, it requires larger amounts of capital and more active participation by the investor.
We are currently in a seller’s market and an experienced real estate company that has been in business for over 3 decades such as ours, will be able to guide you efficiently and effectively towards your investment goals. Contact us and one of our experienced advisors will be able to answer your questions and concerns. We have a number of very attractive investment properties for sale.