How to Invest in Real Estate For Best Returns

Article by MD Tyagi

Real Estate is one of the most profitable investment options available at present. Being a great long term investment, with increasing value over the years it can be a source of passive income for a long duration. One can include this in their wealth-building strategies as well.

However, it is important that you analyze and then decided whether or not you want to invest in real estate. This decision making gets slightly challenging for most people as it requires an upfront amount, to begin with investing. Buying retail shops, office space, land or house, apartment, or villa, can get very expensive; not to mention the charges for maintaining the property. For reducing your confusion, here we have listed 5 best ways to invest in real estate:

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Rental Property Regular Source of Income
Buying investment property to rent them out can be an easy way to generate extra income every month. The investment of commercial property is the best option in comparison to residential property.  We can get more rentals by investing in commercial property by less capital investment in comparison to residential property and more appreciation as well.  And the demand for commercial property is increasing day by day. The rental investment properties are excellent ways to become a part of the real estate investors group. Crediting to regular cash flow, easy acquisition, and simple leverage makes this option even more worthy. However, this does have a few drawbacks; you will have to get proper information about the renters before allowing them. Also, it requires high advance payments; but if you have enough financial backup then this won’t be a barrier for you.

Bigger Estate, Better Deal
One of the most popular means of stepping into real estate investment is by investing in big deals; for either residential or commercial properties. If you wish to expand your investment types with less capital, then this is probably the best option available for you. There are several ways to invest in bigger deals jointly with the developers, few of which are:-
• Virtual office space
• Food Courts
• Group Buy

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Flipping Houses
This option is slightly risky, although it pays great rewards over time. Flipping home concept denotes the acquisition of property at a lower cost, renovate/ remodel it, and sell it for higher pricing. With property value hiking up, this might be an ideal time to purchase some similar property options. To become a thriving house flipper, you must know your way around the market and bargain to get the best house options for your investment. You must know which house can get your better returns; homes with least or just cosmetic renovations give out the best profits. Enhancing the aesthetic appeal of the house can help in increasing the reselling price.

Rent Out Downright or Partly
This is not exactly an investment plan or strategy, it is more like a side job; it’s very commonly practiced and gives fixed returns. And with the outset of online platforms, renting-out houses and other residential spaces has become easier. When you wish to get extra income out of your currently owned property then you can rent out a spare area of your house for a few days. One of the biggest advantages of this method is that you will not have to pay any tax on the payment you collect by renting out space. When you take a vacation, you can rent a part out and use the income for your traveling expenses.

Real Estate Investment Trusts (REIT)
If you are one of those people who think that investing in real estate can get them higher returns, but do not want to step in completely. Then you must go for the REIT option for investing; it is a great way for everyone to become a real estate investor without getting completely involved. This enables the investors to invest in stocks, mortgage instruments, and bonds from the real estate. There are various types of REITs available; these include mortgages, equity, and hybrid. All these render higher yields; your main income is earned from interests paid by others on their mortgages.
• Mortgages REIT invests through mortgages
• Equity REIT invests through properties
• Hybrid REIT is a combination of Mortgage and Equity

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Investing in real estate might not be everyone’s first choice, though it can be very remunerative. Most investors in real estate have made lots of money in the process. If you wish to expand the investment scope, then you must know to make the right decision at the right time. To make correct decisions in the real estate investment process, then here is how to make a befitting decision:

Make Cash Payments
The financial specialists forewarn against taking loans for purchasing real estate. Therefore, you must rethink this before you invest in real estate and properties. Even with rental income, you must be able to pay off the mortgage expenses.

Pre-plan the Expenses
When purchasing for investment reasons, you must give proper thought to the repairs, utilities, taxes, and upkeep of the real estate. It can be very helpful if you take support from rental companies; they can take care of rent collection and basic repairs for space. This might cutoff costs from the rental income; it is very feasible and assists in lowering the problems that come with owning a property for rent. Also, if you have a busy lifestyle then this external support can be an effective option.

Start with Small & Go Big!
Most real estate investors have started their ventures by buying small houses, apartments, or duplexes. They lived in one and gave the other half on rent or lease. However, for this, you must ensure that all tenants you permit are appropriate and have clean records.

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Know the Property
If the reason for your purchase is for resell in the future then you should perform proper research on the property. You must look through its current value and increase in worth in the near future or hike in pricing with slight modification in design. Also, it is worth considering that the locality will grow or not; numerous external factors affect the same. After adequate research, you will be able to know the real worth of the real estate and make the right decision to make a purchase or not.

NOTE: BEFORE INVESTING DO YOUR OWN RESEARCH