Investing in Real Estate - 4 Investment Options

 You can also buy a property by paying only a fraction of the total price and then paying off the balance and interest over time. Here are four options for investing in real estate.

Rental property

Investing in residential rental properties can be great, especially for individuals with renovation and DIY skills and the courage to deal with tenants.

Professionals

• Provides regular income
• Properties can appreciate• You can use leverage to optimize capitalDisadvantages

• Tenant management can be tedious
• Vacancies can reduce income
• Tenants may damage property

House flipping

You can buy undervalued properties that need a bit of an upgrade, renovate them cheaply and then sell them for a profit. However, flipping a house comes with certain risks. First, your repair cost estimate must be accurate, which is no easy feat. Second, the longer the property is in your hands, the less money you're likely to make because you'll be paying the mortgage without generating any income.

Professionals

• Tie up your capital only for the short term
• Potential quick returns

Disadvantages• Requires deep knowledge of the field

Real Estate Investment Trusts (REITs)

REITs are traded on major stock exchanges, much like stocks. A REIT is created when a trust/corporation uses investors' money to purchase and manage income-producing real estate. To maintain REIT status, 90 percent of the trust/corporation's taxable income must be paid out as dividends. REITs allow you to invest in non-residential properties such as office buildings and shopping centers that may not be possible to buy outright.

Professionals They are essentially dividend paying stocks
• Lands are usually long term cash producing leases

Disadvantages
Professionals

• You have the option of investing in one project or in a diverse range of projects
• Geographic diversification

Disadvantages

• Typically illiquid and speculative
• Management fees

Conclusion

The four real estate investment options available to investors include rental properties, house flippers, REITS, and online platforms.