All real estate investors are looking for options that have high returns and as low a risk as possible. This is only possible if you know how to make smart choices. The following three things make for an excellent real estate investment to help you get started.
You may want to compare rental real estate to the stock market. This is because most of us understand these and know that we need to spend money to make money. However, the problem with stocks is that they are so risky. Similarly, retirement calculators work on a guess of when we will actually die. If the estimate is wrong and you live longer, then you will end up broke before your death.
Your investment should also be as low risk as possible. There is no such thing as risk-free real estate, but some risks are too high to take. If at all possible, avoid tenant-in-common options, fixer uppers, real estate development and private real estate funds. Invest in these options and it is unlikely that you will ever see a return. Instead, choose to have titles that are totally yours, on properties that are interesting. Naturally, this means you need to take the time to do research and analysis, and you must exert due diligence. Stay away from properties that have to managed intensively or are otherwise time-consuming. Hence, you don’t want to invest in a holiday home, a college home or a property in a bad neighborhood for instance. Try to find a property that someone with a good credit profile will want to rent for a long period of time. Naturally, this means you also have to be committed to being a respectful and good landlord. It is impossible to never have a problem with your property, but so long as you deal with issues quickly, this shouldn’t be anything to really worry about.
You could also look for REITs (real estate investment rrusts). This means you need less investing capital up front, but the returns are not as high either. Working with REITs basically means you invest in other corporations. Hence, you could invest in anything from an apartment block to a retail park. You can keep track with the performance of a REIT through the NASDAQ and stock exchange. A REIT, essentially, is like a mutual fund that only looks at real estate. Before investing in a REIT, there are a few things to learn about. First of all, look into what the economic conditions are of the areas of key holdings. Find out how the REIT has performed in the past. You should also consider their future plans. Find out who the manager is and what they history is. Finally, what is the state of the current real estate market and how will the REIT respond to any changes in this market?